Bristol-based Curtis Banks Group (CBP.L) provides pension administration services principally for Self Invested Personal Pension schemes (SIPPs) and Small Self-Administered Pension Schemes (SSASs). The service offered to clients includes setting up SIPPs, accepting contributions and transfers of permissible assets to clients’ SIPPs, carrying out banking transactions, making investments on behalf of SIPPs and processing benefit payments from SIPPs. The Company also acts as a trustee of each SIPP, and this service is provided in each case by one of eight subsidiary trustee companies, which act as bare trustees.
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On September 4 2017, CBP published interim results to June 30, which revealed a strong first year contribution from recently-acquired Suffolk Life. Half-year operating revenues rose 98% to £21.4m, while PBT, amortisation and non-recurring costs increased by 85% to £5m. Diluted EPS rose 65% to 5.84p, and the interim dividend increased to 1.5p (2016: 1.0p). CEO Rupert Curtis said the first half of 2017 “has been extremely active for Curtis Banks and we have made substantial progress against our strategic objectives. Our SIPP numbers continue to grow through high levels of organic growth and we now administer over 75,000 SIPPs with over £23bn of assets.“ ”As in previous years, we expect performance will be weighted towards the second half of the year and we remain confident about delivering further profitable growth in the future.”
The VectorVest GRT (Earnings Growth Rate) metric flagged up the potential at CBP nearly a year ago, when the shares were trading around 176p. Now at trading at 299p, CBP still retains a forecasted GRT of 32%, which VectorVest considers to be excellent, a factor fully supported by the CEO’s confidence in delivering further profitable growth and the fact that results are likely to be weighted towards the second half of the year. Traders should note that the RS (Relative Safety) metric records a fair rating of 0.94 on a scale of 0.00 to 2.00, meaning the stock is not without risk, but with a current value of 366p per share recorded by VectorVest, CBP remains undervalued at the current 299p per share.
The chart of CBP.L is shown below in my normal format. The green line study above the price is the VectorVest valuation while the blue line study in the window below the price shows earnings per share (EPS). The share is undervalued, growing earnings strongly, on the verge of breaking through a 52 week high and is on a Buy recommendation.
Summary: Over the past year CBP has amply illustrated the calibre of its business model and growth strategies. Historically CBP has always delivered a stronger second half, and despite the stellar half year results, VectorVest views the excellent GRT rating as a strong indicator of further growth to come, notwithstanding the element of risk flagged by the RS metric. Buy.
Dr David Paul
Sept 26th 2017
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