Ahead of Tuesday 18 September, when JTC Plc (LON:JTC) reports its maiden interim results to 30 June 2018, it has released a trading update which confirms:
- JTC has performed well throughout the first half of the year;
- Steady progress has been made on all strategic initiatives outlined at the IPO;
- Performance has been in line with the Board’s expectations
- The Board sees opportunities for both organic and inorganic growth in the second half of the year and beyond.
The outlook statement from Nigel Le Quesne, Founder and Group CEO is positive: “we are confident that the growth plans we laid out at the time of our initial public offering are on track and progressing well.”
Zeus view:
JTC is delivering double digit organic growth and benefiting from recent acquisitions. As a reminder: in 2017, JTC acquired Merrill Lynch Wealth Management International Trust & Wealth Structuring business unit (“ITWS”) which reinforces its presence in the US. The update confirms that there has been steady progress integrating ITWS.
The fragmented fund, corporate and private wealth services market offers potential consolidation opportunities. JTC has good visibility over possible acquisitions. Our forecasts do not include future acquisitions. Since 2010, JTC has made 12 acquisitions; all pre-2017 acquisitions have been fully integrated.
JTC has delivered revenue growth for the past 30 years. Over the past 5.5 years it has grown revenues by 21% CAGR. The combination of double digit revenue growth, benefits of scale and 4x-covered dividend should deliver reassuring growth and high double-digit shareholder returns each year. We see JTC as a core holding: a growth stock with defensive attractions.
The update provides no financial information. We leave our forecasts unchanged.
Valuation:
JTC Plc at 400p a share, is trading on a current year PER of 24.3x and PEG of 1.0x, based on what we believe to be prudent forecasts.
With prospects of additional inorganic growth, there are good reasons to see JTC’s share price rising further.
