Sunday tips round-up: Brewin Dolphin, Electrocomponents, IMPs, Telecom Plus, SVG

17th Jul 2011 09:17

Private client investment manager Brewin Dolphin can trace its roots to the mid-18th Century and was a founding member of the London Stock Exchange, writes Midas in the Mail On Sunday. It has more than 100,000 clients, and since the turn of the century the proportion of clients who are taking the firm's discretionary services rather than making their own decisions has more than doubled from 26% to 60%, and executive chairman Jamie Matheson hopes to increase the percentage still further. The shift is important because the more discretionary clients Brewin has, the more annual fee income it receives and the more robust its profits are.Profits for the year to September are forecast to rise more than 15% cent to £46m, with another 18% increase to £55m pencilled in for the year to September 2012. Dividends are expected to move in tandem, increasing from 7.1p last year to 7.3p in 2011 and 7.6p next year. This growth is likely to come from an expansion of services and increased geographical reach. The firm is also engaged in a comprehensive update of its systems, which should cut costs and help customers who enjoy checking their portfolios online. Brewin Dolphin is trading at 160p and after recent falls the shares are now cheaper than those of many rivals, even though growth prospects are good and the dividend yield is almost 5%. Buy, says Midas.Electrocomponents' shares have lost one-fifth of their value since Questor in the Telegraph last said buy - but these falls look overdone, Questor believes. Friday's statement was reassuring. The main cause of the recent slide was some dire results from Electro's peer Premier Farnell. Sales growth has seen something of a slowdown at Electrocomponents too - but nothing to get spooked about - especially as there were strong comparators.As an analyst at Seymour Pierce said on Friday: "If proof were needed that the recent problems at Premier Farnell were of their own making and unrelated to deterioration in market conditions, it was provided in today's trading update from Electrocomponents." It is also important to note that, since Questor last gave an update on the company, consensus for revenues, profits, earnings per share and the dividend have all moved materially higher. The shares are also yielding a safe 5.2%, so this should support any downside. First tipped on July 19 2009 at 140½p and trading on a current-year earnings multiple of 11.3, falling to 10.1, the shares remain a buy at 238.7p, the Sunday Telegraph says.Rumours that Imperial Tobacco could be a takeover target for British American Tobacco may look wide of the mark, but they illustrate that chief executive Alison Cooper still has to convince investors she knows what she is doing after a year in the job. She seems determined to do so, the Sunday Times notes. In presentations last week, the company explained how it intends to boost sales, with increased innovation a particular focus. Products launched in the past three years account for less than 10% of sales against 15%-20% at other consumer-goods groups.Geographical spread may explain why British American Tobacco shares have been doing rather better than those of its smaller UK-listed rival. While BAT has outperformed the FTSE All-Share index by 9% over the past year, thanks to its exposure to emerging markets, Imperial has underperformed the index by 3.6%. Several analysts believe Imperial should be worth £24 a share or more, against £21.50 last Friday. If concerns over Spain ease further, the company might just manage to get there, the Times suggests.Telecom Plus trades under the name Utility Warehouse and is the only business to offer gas, electricity, phone, mobile and broadband services all together. Midas in the Mail on Sunday recommended Telecom Plus exactly three years ago when the shares were 318p, and they have since more than doubled to 678p. A trading statement last week was confident about the future and chief executive Andrew Lindsay hopes to increase customers from 380,000 to more than a million over the next few years, but investors who bought in 2008 have been well rewarded and should consider taking some profit. The Mail suggests selling half your holding and keeping the rest.Shareholders who backed a £200m fund raising by SVG Capital to cut the investment group's hefty debt pile in early 2009 have seen the value of their stakes triple. SVG has 80% of its assets tied up in Permira's private equity investments, but now comes the crunch, suggests the Sunday Times. Permira's portfolio is maturing and cash from forthcoming disposals, such as television producer All3Media, should increase. That should narrow the discount at which the shares are trading. Oriel Securities has raised the top end of its forecast for SVG's net asset value from 380p to 390p against 351p at the end of March.SVG still has £302m of debt, but shareholders are beginning to ask about improving capital returns. In short: how does 20% shareholdeder Coller, which doesn't keep many listed investments, get its money back? The easiest way could be to put SVG into run-off, but the management has other ideas, including backing Permira's next fund raising, which is due this autumn. Mindful of 3i's troubles and Candover's demise, the listed private equity sector could do with a poster boy. All SVG needs is a shareholder register that is four-square behind it.--jh