Afh Financial Group Net Income surged on 81.6% and EBITDA Margin increased on 2.7 pp from 20.4% to 23.1%
20 Jan 2020 • About Afh Financial Group (
$AFHP) • By InTwits
Afh Financial Group reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Afh Financial Group is a fast growth stock: FY2019 revenue growth was 46.7%, 5 year revenue CAGR was 37.7% at FY2019 ROIC 16.5%
- EBITDA Margin is expanding: 23.1% in FY2019 vs. 20.4% in FY2018 vs. 12.5% in FY2015
- Afh Financial Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 1.8%
- CAPEX is quite volatile: £1m in FY2019, £0m in FY2018, £0m in FY2017, £0m in FY2016, £1m in FY2015
- The company has highly profitable business model: ROIC is 16.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.2x while industry average is -1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 46.7%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.95 pp from 5.5% to 6.4% in FY2019. EBITDA Margin stuck to a growing trend at 2.7 pp per annum in the last 5 years.
Gross Margin decreased slightly on 1.0 pp from 54.4% to 53.4% in FY2019. SG&A as a % of Revenue decreased on 3.6 pp from 33.8% to 30.2% in FY2019. SG&A as a % of Revenue stuck to a declining trend at -4.0 pp per annum in FY2015-FY2019.
Net Income margin increased on 2.8 pp from 11.8% to 14.5% in FY2019. Net Income margin grew at 2.3 pp per annum in FY2015-FY2019.
Investments (CAPEX, working capital and M&A)
Afh Financial Group's CAPEX/Revenue was 1.1% in FY2019. Afh Financial Group's CAPEX/Revenue decreased slightly on 0.63 pp from 1.8% in FY2016 to 1.1% in FY2019. It's average CAPEX/Revenue for the last three years was 0.82%. During FY2015-FY2019 CAPEX as a % of Revenue bottomed in FY2018 at 0.55%.
Return on investment
The company operates at good ROIC (16.5%) and ROE (14.6%). ROIC increased on 2.1 pp from 14.4% to 16.5% in FY2019. ROE increased on 3.0 pp from 11.6% to 14.6% in FY2019. During the last 5 years ROIC bottomed in FY2016 at 11.3% and was growing since that time. ROE stuck to a growing trend at 1.0 pp per annum in FY2015-FY2019.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 0.9x. Net Debt / EBITDA surged on 2.0x from -1.8x to 0.2x in FY2019. Debt jumped on 389% while cash dropped on 44.5%. During the last 5 years Net Debt/EBITDA bottomed in FY2018 at -1.8x.
Afh Financial Group has no short term refinancing risk: cash is higher than short term debt (1,436.9%).
Valuation and dividends
Afh Financial Group's trades at EV/EBITDA 9.8x and P/E 15.1x.
Financial and operational results
FY ended 30 Nov -0001
Afh Financial Group ($AFHP) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 20.977 | 24.130 | 33.639 | 50.664 | 74.337 | 46.7% |
| Gross Profit | 10.968 | 13.359 | 17.967 | 27.565 | 39.680 | 44.0% |
| SG&A | 9.213 | 11.121 | 12.320 | 17.126 | 22.452 | 31.1% |
| EBITDA | 2.627 | 3.444 | 5.511 | 10.351 | 17.178 | 66.0% |
| Net Income | 1.173 | 1.677 | 3.063 | 5.954 | 10.813 | 81.6% |
Balance Sheet
|
|---|
| Cash | 3.766 | 6.717 | 9.275 | 21.543 | 11.955 | -44.5% |
| Short Term Debt | 0.063 | 0.076 | 0.077 | 2.221 | 0.832 | -62.5% |
| Long Term Debt | 3.432 | 3.352 | 3.281 | 1.067 | 15.241 | 1,328.4% |
Cash flow
|
|---|
| Capex | 0.789 | 0.423 | 0.265 | 0.278 | 0.834 | 200.0% |
Ratios
|
|---|
| Revenue growth | 39.5% | 15.0% | 39.4% | 50.6% | 46.7% | |
| EBITDA growth | 98.0% | 31.1% | 60.0% | 87.8% | 66.0% | |
|
|---|
| Gross Margin | 52.3% | 55.4% | 53.4% | 54.4% | 53.4% | -1.0% |
| EBITDA Margin | 12.5% | 14.3% | 16.4% | 20.4% | 23.1% | 2.7% |
| SG&A, % of revenue | 43.9% | 46.1% | 36.6% | 33.8% | 30.2% | -3.6% |
| Net Income Margin | 5.6% | 6.9% | 9.1% | 11.8% | 14.5% | 2.8% |
| CAPEX, % of revenue | 3.8% | 1.8% | 0.8% | 0.5% | 1.1% | 0.6% |
|
|---|
| ROIC | 12.8% | 11.3% | 12.4% | 14.4% | 16.5% | 2.1% |
| ROE | 10.1% | 10.2% | 11.5% | 11.6% | 14.6% | 3.0% |
| Net Debt/EBITDA | -0.1x | -1.0x | -1.1x | -1.8x | 0.2x | 2.0x |
Peers in Financial Services
Below we provide Afh Financial Group benchmarking against other companies in Financial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Polo Resources Ltd ($POL) | | | -93.4% | 308.5% | -44.4% |
| Impax Asset Management Group ($IPX) | | 6.8% | 55.2% | 100.9% | 12.2% |
| Plus500 Ltd ($PLUS) | 20.4% | 19.0% | 33.3% | 64.8% | |
| S & U ($46IE) | -40.6% | 25.2% | 33.9% | 31.8% | |
| Real Estate Credit Investments Pcc ($RECP) | 47.3% | -29.8% | 4.0% | 30.7% | |
| |
|---|
| Median (18 companies) | 2.7% | 5.0% | 12.3% | 17.1% | 12.2% |
|---|
| Afh Financial Group ($AFHP) | | 15.0% | 39.4% | 50.6% | 46.7% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Record ($REC) | 99.3% | 99.0% | 98.8% | 98.7% | |
| First Property Group ($FPO) | 83.0% | 80.6% | 78.6% | 76.3% | |
| Walker Crips Group ($WCW) | 66.7% | 67.7% | 69.8% | 67.2% | |
| S & U ($46IE) | 65.3% | 63.3% | 58.6% | 53.8% | |
| Fulcrum Utility Services Ld ($FCRM) | 28.8% | 36.0% | 40.8% | 36.7% | |
| |
|---|
| Median (7 companies) | 52.8% | 63.3% | 49.4% | 53.8% | |
|---|
| Afh Financial Group ($AFHP) | 52.3% | 55.4% | 53.4% | 54.4% | 53.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Real Estate Credit Investments Pcc ($RECP) | 80.3% | 79.3% | 79.5% | 81.8% | |
| Plus500 Ltd ($PLUS) | 48.2% | 46.0% | 59.3% | 70.2% | |
| Hargreaves Lansdown ($HL.) | 51.2% | 57.5% | 69.3% | 66.8% | |
| First Property Group ($FPO) | 42.9% | 52.2% | 57.4% | 52.9% | |
| S & U ($46IE) | 47.2% | 48.0% | 44.8% | 41.7% | |
| |
|---|
| Median (16 companies) | 18.3% | 18.5% | 22.8% | 25.3% | 29.5% |
|---|
| Afh Financial Group ($AFHP) | 12.5% | 14.3% | 16.4% | 20.4% | 23.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| First Property Group ($FPO) | 0.1% | 6.4% | 8.5% | 9.4% | |
| Walker Crips Group ($WCW) | 2.5% | 0.9% | 1.7% | 5.4% | |
| Mxc Capital ($MXCP) | 0.5% | 4.9% | 0.0% | 4.7% | 0.2% |
| Commercial Bank Of Qatar(The) ($CBQS) | 3.9% | 3.3% | 1.8% | 3.8% | |
| Impax Asset Management Group ($IPX) | 0.8% | 0.5% | 1.1% | 2.6% | 0.5% |
| |
|---|
| Median (17 companies) | 0.8% | 0.8% | 1.0% | 1.0% | 0.3% |
|---|
| Afh Financial Group ($AFHP) | 3.8% | 1.8% | 0.8% | 0.5% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Plus500 Ltd ($PLUS) | 116.5% | 118.9% | 143.2% | 196.2% | |
| Hargreaves Lansdown ($HL.) | 87.5% | 90.0% | 93.3% | 82.4% | |
| Impax Asset Management Group ($IPX) | 16.1% | 15.0% | 19.7% | 30.7% | 28.8% |
| Fulcrum Utility Services Ld ($FCRM) | | 347.2% | 103.4% | 29.9% | |
| Record ($REC) | 20.2% | 18.5% | 20.7% | 22.0% | |
| |
|---|
| Median (24 companies) | 7.6% | 7.5% | 8.5% | 5.8% | 8.0% |
|---|
| Afh Financial Group ($AFHP) | 12.8% | 11.3% | 12.4% | 14.4% | 16.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| First Property Group ($FPO) | 12.3x | 9.4x | 7.6x | 7.7x | |
| S & U ($46IE) | 3.1x | 0.5x | 1.8x | 3.2x | |
| Leeds Group ($LDSG) | -0.3x | 1.4x | 2.6x | 2.5x | |
| Impax Asset Management Group ($IPX) | -0.5x | -0.6x | -2.0x | -0.3x | -0.5x |
| Hargreaves Lansdown ($HL.) | -1.1x | -0.9x | -0.3x | -0.4x | |
| |
|---|
| Median (13 companies) | -1.2x | -1.4x | -1.6x | -0.6x | -2.2x |
|---|
| Afh Financial Group ($AFHP) | -0.1x | -1.0x | -1.1x | -1.8x | 0.2x |
