Christie Group – buying, building or selling, this company is just the ticket

Two weeks ago, the AIM-quoted Christie Group (LON:CTG) announced its interim results for the six months to end June this year.

They clearly showed that the company is well on its road to regaining its composure and kick up the profits again.

Now international but with a lot of history

With its history dating back to 1846, this leading professional business services group today has some 40 offices across the UK and Europe.

The Christie Group operates in two complementary business divisions: Professional & Financial Services, taking in the brand names Christie & Co, Pinders, Christie Finance and Christie Insurance; and in Stock & Inventory Systems & Services it operates Orridge, Venners and Vennersys.

A very wide range of services

Covering the life cycle of business ownership, it offers some 80 services to client companies in agency, valuation services, investment, consultancy, project management, multi-functional trading systems and online ticketing services, stock audit and inventory management.

The group is focussed upon its specialist markets in the hospitality, retail, healthcare, leisure, medical, childcare and education sectors.

I was particularly impressed to see that the group’s online cloud-based ticketing sales and admission systems is provided to visitor attractions, such as historic houses and estates, museums, zoos, safari parks, aquaria, and cinemas. So one hopes that the removal of the various lockdowns will have helped to regenerate this of the business.

Across its subsidiary operations, it is engaged in valuing, buying, selling, developing, financing, and the insuring of various businesses.

It also provides business valuation and appraisal, consultancy and agency, and mortgage and insurance broking services.

The company advises and supports business owners in its chosen sectors, from supporting them in buying a business, to helping them secure funding and arranging specialist insurance cover, and then working with them to market and maximise the value of their assets should they choose to sell.

Fairly tight equity

With some 26.53m shares in issue, the company has a market value of £32.9m.

Major shareholders include Philip Gwyn (27.93%), J P Rugg (6.00%), Chairman & Chief Executive David Rugg (4.87%), Hwfa Gwyn (3.87%), Katie Gwyn (3.87%), Christina Bretten (3.87%), Anna Ross (3.87%), Lord Lee of Trafford (3.79%) and Andrew Muir (3.19%).

Recent results

The recent interims reported revenues were up 52% at £9.8m, while its operating loss of £5.5m last year was replaced by £7.3m swing into profits of £1.8m. That took the earnings from a negative 18.54p to a positive 3.17p per share, enabling the reinstatement of an interim dividend of 1p per share.

The group had a robust cash position at the period end of £9.8m, worth nearly 37p per share.

Broker’s View

Analyst Peter Ashworth, at the group’s brokers Shore Capital, estimates that for the full year to end December revenues could increase to £59m (£42.2m) with adjusted pre-tax profits of £2.2m (£5.7m loss). He sees earnings this year of 6.7p per share.

Over the next two years his forecasts are for £65.7m then £71.6m of revenues, with profits of £3.2m then £4.6m for 2022 and 2023 respectively. Earnings come out at 9.8p then 13.2p per share.

Understandably he believes the shares, which have already more than doubled in the last year, offer scope for further outperformance.

My View

When compared to the valuations of others within its sector (such as Accesso Technology, M Winkworth, Foxtons, Savills, Begbies Traynor and K3 Capital) it does feel to me that there is a lot of upside potential for this group’s shares.

Now at 124p, I see them rising back over the next year or so to higher than the 160p level at which they peaked just three years ago.

My Target Price is now set at 155p.