Manolete Partners – Next Wednesday’s figures should be good

Mark Watson-Mitchell is bullish ahead of next week’s results announcement from Manolete, the leading insolvency litigation finance specialist. 

Without doubt my best set of predictions around company profiles, in the last year or so, have been about this leading insolvency litigation financing company.

On Wednesday of next week, the company will announce its results for the year to end-March 2020 – and they should be very good.

Way back at the end of November last year, the company declared its interims. They saw revenue for the first half to end-September 2019 up 15% to £7.5m, while pre-tax profits were up 42% at £4.3m, and earnings up 41% at 7.9p per share.

At that time Steven Cooklin, the CEO, stated that, “Given the strength of our position in the specialist insolvency litigation market, our firmly established and growing network of Insolvency Practitioners and our proven track record of delivering outstanding returns, we look forward to the second half and beyond with confidence and enthusiasm.”

In early May this year Cooklin was updating shareholders on the group’s progress during this very difficult Covid-19 period. He declared that as the crisis developed the company had continued to perform well, with case enquiries in the first four months of calendar 2020 being up 129%, significantly ahead of comparable 2019 levels.

He commented that the company had adapted well to the unprecedented challenges presented by the crisis, noting that it would lead to a widespread economic disruption, which will increase the number of UK case referrals.

Brokers estimates for the last year suggest that revenues could have lifted from £13.8m to £18.4m, with pre-tax profits leaping from £5.9m to £10.2m, and earnings showing through at 19p per share.

For the current year to end-March 2021 some £26.1m of revenues could see £13.5m pre-tax profits, worth 25p per share in earnings.

This company has a strong funding position and considers itself capable of handling its operations as it continues to grow its business profitably.

As the number of UK insolvencies is due to increase before 2020 is out then undoubtedly Manolete Partners will be a big beneficiary of others distress.

Next Wednesday’s results will be eagerly anticipated by me ahead of my setting new price objectives.

The company’s shares have been briefly as high as 617p, that was a year ago, and as low as 250p, at the end of March this year. They now trade around the 510p level, at which the company is capitalised at £222m.

Next week’s results will, I am convinced, confirm my opinion that these shares are going a lot higher yet.

Profile 12.02.19 @ 230p set an end-2020 Target Price of 300p*.

Profile 26.02.19 @ 330p but set no target.