Source: Sharecast
Canaccord Genuity said Microlise was the market leader among large HGV fleets, with a roughly 58% market share, and counts the top 15 UK retailers as customers. Microlise has grown revenues from £17.7m at the time of an MBO in FY08 to £81.0m in FY24, equating to a compound annual growth rate of 10%.
Canaccord noted that Microlise's software was mission-critical, and its modular software platform was exposed to "several structural tailwinds", including digital transformation, sustainability mandates, and an increase in compliance in the industry.
The Canadian bank also stated that Microlise has "a significant expansion opportunity" within its installed base, with a roughly £300.0m annual recurring revnenus opportunity if all customers took all modules.
"Microlise is a quality compounder with a strong installed customer base and minimal churn," said Canaccord. "We have used the wider UK SaaS peer group to compare Microlise's 'Rule of 40' credentials. Microlise would post a Rule of 20 performance in FY25, with a fair value of 2.4x EV/Sales on our forecasts. We use this as our target multiple to generate our target price of 199.0p."
Analysts at Keefe, Bruyette & Woods reiterated their 'outperform' rating and 430.0p target price on merchant banker Close Brothers on Thursday after chief executive Mike Morgan delivered "an excellent presentation" to its sales force.
KBW said key takeaways from Morgan's presentation were that capital was "better than many appreciate", that profitability would likely improve from its "wholly inadequate" H1 return on tangible equity and "clearly has to be in double figures", and that it was confident that franchising offers "a range of growth opportunities".
"CBG trades on 6.0x KBWe adjusted EPS26e and/or 0.35x FY25e tangible book," said KBW.
"There is clearly considerable uncertainty around the outlook, but in a sector where banks routinely trade on >1x tangible book, it is hard to argue that the shares are not pricing considerable downside (discount to tangible book equates to circa £850.0m even after the £165.0m H1 motor finance redress provision."
Reporting by Iain Gilbert at Sharecast.com
