Headquartered in Middlesbrough, Ramsdens Holdings (LON:RFX) is certainly a company to follow.
It is a growing, diversified, financial services provider and retailer, operating from 158 stores within the UK and has a growing online presence.
The interim results for the six months to end March this year reported a 33% advance in revenues to £39.0m (£29.3m), while its pre-tax profits increased 68% to £3.7m (£2.2m).
Earnings came out nearly 59% better at 8.9p (5.6p). It increased the interim dividend by 22% to 3.3p a share.
The group operates through the four core business segments of foreign currency exchange, pawnbroking loans, precious metals buying and selling and retailing of second-hand and new jewellery. It does not offer unsecured high-cost short term credit.
The interim report shows a 32% advance in its jewellery retail revenues to £17.3m, of which its online side put on an 89% increase to £3.7m.
The pawnbroking book was 29% higher with loans at £9.7m.
Its gross profit from foreign currency was 41% better at £4.9m, while the purchase of precious metals showed a 28% forward move to £4.0m.
Having opened six new stores in the first half year, the group has plans to open another six stores in the second half, significantly enhancing its retail presence.
Overall, these excellent results saw the group’s net assets gain £5.4m to £43.0m.
CEO Peter Kenyon stated that:
"We are pleased to report an excellent performance in the first half of the year which was achieved by strong trading across all our key income streams. This momentum puts us on course to deliver record profits for the Group in the current financial year.
We are successfully executing against our long-held strategic priorities.
We are focused on driving organic growth by delivering ongoing continuous improvements to our operations, expanding the store estate and investing in our online offering. In addition, we are continuing to seek and appraise attractive consolidation opportunities in what remains a highly fragmented market.
With our diversified income streams, strong brand and growing customer base, we are highly confident in the Group's growth prospects for the coming years, thereby enabling us to create significant value for all stakeholders."
Analyst Opinion – worth its weight in gold
James Allen at Liberum Capital rates the group’s shares as a Buy, increasing his Target Price to 290p a share.
For the full year to end September he is going for sales to rise to £78.6m (£66.1m) with its pre-tax profits rising to £10.0m (£8.3m), taking earnings up to 23.6p (20.7p) per share and easily covering a dividend of 10.4p (9.0p).
He concludes that “Ramsdens is trading on only 10x P/E, with the market still failing to price in upgrades ahead of time.”
Conclusion – heading to 300p?
Seven months ago we featured this group, when its shares were 201p and now we conclude that it’s shares have a lot further to climb yet.
They are trading nearly 5% better this morning at 255p, while it is easy to see that Liberum’s Target Price is very achievable in the short term.