The company states that results are broadly in line with market expectations, however the substantial revenue beat of £2m/ 25% more than the £8m total revenues we had forecast for FY24E can only, in context, mean that the International distribution strategy is working. With full year audited results early next year we believe we are likely to see International AUA growth which surpasses our projections, with those assets soon to be profitably managed by TEAM itself, rather than by third-party fund managers.
We see TEAM at 3.8x September 2026 earnings and 2.0x 2027. The current share price clearly implies some mix of the company not attracting the assets to make it to profitability, and being diluted along the way. The company has said it will week to raise additional capital.
Our forecasts drive a fair value of 70p per share, > 6x the current share price, based on a DCF analysis, using a 10% WACC and only 16% medium term growth, while our explicit forecasts have a 26% revenue CAGR 2023-2027E. The drop-through in this industrial model, with client assets flowing to a largely fixed cost investment management machine in Jersey, means that each subsequent year’s cashflows is very material to the bottom line.
