8th Jul 2024 11:42
(Alliance News) - Knights Group Holdings PLC expects to see an improved outlook for corporate transactions and the real estate sector as UK interest rates ease.
In the financial year ending April, the London-based professional services company said pretax profit increased 29% to GBP14.8 million from GBP11.5 million a year prior. Revenue rose 5.6% to GBP150.0 million from GBP142.1 million, or by 1.9% on an organic basis, from a year ago.
Underlying earnings per share increased 8.0% to 21.81 pence from 20.20p. Basic EPS rose 2.4% to 11.47p from 9.28p.
The final dividend was hiked by 12% to 2.79p per share from 2.50p, giving a 9.2% increase in the total dividend to 4.40p from 4.03p from a year prior.
Chief Executive David Beech said it was a "good" performance against a "challenging market backdrop".
"Trading in the first few weeks of the year has been encouraging. Despite some continued macroeconomic uncertainty, we are seeing a strong recovery in the residential property market, and anticipate an improving corporate M&A market, which we expect to support organic growth in our revenues during the current financial year and beyond," it said.
Shore Capital Markets expects the "current malaise" in the M&A market to continue until the Bank of England starts cutting bank rate.
"Bloomberg consensus attributes a 63% probability that the Bank of England will cut rates at the August meeting, which could be a positive signal for M&A," Shore said.
"The subdued real estate market, combined with the weak M&A environment, has impacted trading for Knights, which is reflected in the share price. However, despite this challenging environment, the business model has delivered organic growth, improving margins and positive cash conversion."
Knights shares fell 6.2% to 135.95 pence each in London on Monday morning.
Shore rates the stock at 'buy', believing the shares to be "too cheap".
Stifel also has a 'buy' rating.
"[We] view the current valuation as undemanding for a business with notable liquidity headroom," Stifel added.
By Eric Cunha, Alliance News news editor
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