Jarvis Securities (JIM)?

Hi,

Does anyone think the administration of SIPPs and the like is going to be as much a growth opportunity in the future as it has been in the past? I ask because of JIM’s metrics seem quite compelling.

I don’t currently own JIM, but maybe it is one to put on watchlist ready for the inevitable dip? (Maybe overbought due to Simon Thomson rec @ IC, and low mkt cap).

The cashflow is a bit lumpy relative to operating profit, but it seems to even out over time. There is a good sized director shareholding.

At a market cap of £88m, could it ever be the size of AJ Bell (£1,755m) or HL. (£6,700m) whilst paying dividends out along the way? Or is it just B2B rather than B2C/retail, which limits it’s potential runway?

Some stats below, with apologies for the formatting:
Metric, Most recent, 3 yr ave
Market Cap, £88.8m
Enterprise Value, £83.6m
FCF Conversion, 135%, 16.7%
ROCE, 77.9%, 79.7%
ROE, 64.9%, 64.1%
Net profit margin, 37.2%, 35.8%
Debt/mkt cap, 0.3% -
PE, 22.1, 17.8
Date floated 23/12/04, 900% capital return
Capital CAGR, 15.2% since float
Total return CAGR, 19% Since float
NEFF TRR, 5/12 subsector, 13/55 sector

Thanks,
Ben

1 Like

Hi Ben,

Jarvis cropped up on my radar no that long ago:
https://knowledge.sharescope.co.uk/2020/11/04/screening-for-my-next-long-term-winner-jarvis-securities/

A lot to like, at least with the financials. Mixed opinions on the service though. Overall, probably one of the most attractive opportunities I have looked at for SharePad this year.

The latest (Q4) dividend was 3.125p, which in old money (pre-share split) would have been 13p – versus 7.25p per share for the same quarter of 2019. I think dividends are now running at 12-13p per share (post-share split), which underpins a 6% yield at 200p. The 1.5x dividend-cover policy would suggest EPS of c19p and a P/E of 10-11. So yes, interesting, assuming my quick sums are correct.

I think AJB and HL. (and Integrafin) have done so well is by charging annual fees on funds. The sums invested in funds by PIs are much larger than in direct equities, and I can’t recall JIM enjoying a fund source of income.

To a certain extent the platforms are making money from old rope by skimming a % from all those fund investments – the holders of which are often quite passive and probably less bothersome to handle.

I can’t see JIM getting close to AJB etc just yet purely through execution-only dealing. But the opportunity for growth is there through extra SIPP admin. The market for SIPPs ought to be positive as final-salary pensions become fewer in number. The attraction to JIM is its low-cost angle for customers and I like that simple, ‘challenger’ mentality.

Maynard

Thanks Maynard, that helps alot.

I may add some.

The dcf suggests 29 per cent upside (@ 5 per cent growth rate/10per cent discount rate).

I would just have to accept that the share price may go nowhere for a couple of years after the recent run, however the dividend would be payment for waiting in the meantime.

It’s on the watchlist in any event!

Ben