Since its flotation in 2000, Shore Capital Group (LON:SGRS) has navigated a number of market cycles, generating operating profits throughout this period. More recently, it has continued to grow its franchise, adding further corporate clients and increasing assets under management in the first half of the current year, helped by investment to support client service. Equity market conditions have become more difficult but this has already been reflected in a weaker share price, which now stands below book value, suggesting significant potential upside on a longer-term view.
Recent trading: Diversification a positive factor
Shore Capital reported interim figures in mid-September. Group revenue and pre-tax profits were up 6.5% and 2.8%, respectively. Capital Markets generated lower revenue and profit, however, corporate clients were added, research coverage increased and a high level of institutional take-up for the research and sales service achieved. Since the period end, Shore Capital’s appointment as joint broker to FTSE 100 constituent, Marks & Spencer, is a notable client win. Growth in AUM, revenue and profit in Asset Management were sufficient to generate the overall increase at the group level. The next phase in the strategy for growth here is to leverage the track record established in private client tax-efficient products for institutional investors. A step in this direction has been reported this month with the commitment of £200m of institutional funding for property development finance.
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