Jarvis Securities plc (LON:JIM) is the topic of conversation when DirectorsTalk caught up with Nick Spoliar director institutional research WHIreland.
Nick you recently upgraded your view on Jarvis Securities, what were the key factors that led to the upgrade?
The company has benefited from notably (1) an excellent set of results on July 15th (PBT +28%, we upgraded FY PBT by 15%) and (2) last month’s Special DPS, which at 8.5p was more than double the previous special. We are also encouraged over the longer term by the Bank of England Monetary Policy Committee’s change in stance last Friday, as Jarvis would likely benefit from a rising interest rate cycle.
How do you view the outlook for Jarvis?
We take a positive view of the outlook. With a more active market, the company has been experiencing a golden period. However what is easily missed is the contribution of the company’s own proactive actions previously to the present success, notably in adjusting its fee and cost structure post MIFID2 – clearly this is ongoing in its positive impacts. Trading continues good and the Model “B” client base is promising with a good pipeline, and a steady stream of conversions.
In terms of an investment case how do you see the company?
I see the company as having a strong, balanced model involving the retail trading on the one side and the Model “B” clients on the other. At the same time, with (on our estimate) £300m-plus cash under administration and a growing number of individual and institutional clients, the company developed a meaningful platform for growth over the next stage of its development. The business is inherently cash-generative and has illustrated time and again its shareholder focus through paying a very decent (two thirds-plus of earnings) dividend. On that score, and notwithstanding good share price performance, it is still yielding more than 5% even before you consider the impact of the Special.
