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I've tried to do some calculations regarding PE ratios and cash adjusted PE ratios in order to get a sensible target price.
I've used:
Gresham House annual report for year ending December 2020
Gresham House trading update 9/12/21
Simon Thompson IC article 14/10/21
On publication of the 2020 annual report the figures for Gresham were:
Share price £8.00
Shares in issue 34 million
Cash £45 million
Profit £12.1 million
This gives a market capitalisation of £272m (8 x 34)
That implies a PE ratio of 22.5 (272 ÷ 12.1)
And a cash adjusted PE ratio of 18.7 (272 - 45) ÷ 12.1))
If the share price remains £9.00 at the end of the year and all of the trading update figures are realised then:
Share price £9.00
Shares in issue 38 million
Cash £69 million
Profit 18.5 million
This gives a market capitalisation of £342m (9 x 38)
That implies a PE ratio of 18.5 (342 ÷ 18.5)
And a cash adjusted PE ratio of 14.5 ((342 - 69) ÷ 18.5))
Attaining a cash adjusted PE of 14.5 twelve months ahead of the Investors Chronicle target ( 14.5 for 2022 and 13 for 2023).
It may be more realistic to apply the cash adjusted PE from 2020 (18.7) to the 2021 figures and calculate a price target.
This calculation gives a share value of £10.92. ((18.5 x 18.7) +69) ÷ 38))
Would it be unrealistic to attribute a PE of 20? Certainly the current rate of growth could support such a multiple. And, what of profit and cash? I tend to think that the trading update will have held a little back: it will certainly be easier to report further outperformance rather than apologise for failing to attain an outcome you'd heralded a few months earlier.
With this in mind, applying cash if £70 million, profit of £20 million and a cash adjusted PE of 20 gives a share value of £12.36
Hopefully the above will provide some guidance as to the likely direction of travel of the share price although perhaps not an exact destination.
I like your calculations may they hopefully come to fruition. On another note there is surely potential for AUM to improve beyond the recently upgraded target of £8bn for 2025 not sure if this is beginning or end of year target. Increase in AUM of 50% this year probably won't be repeated but even more modest increases of around 15 to 20% would see that target beaten. All in all points to steady growth as I am a long term investor rather than a trader that would be fine for me. Modest dividend payment has also increased for 3 years