MIDAS SHARE TIPS UPDATE: Lettings agency tip Martin & Co grabs slice of success
Lettings agency chain Martin & Co floated three months before McColl’s and shares its name with the group’s chain of newsagents, but that is where the similarities end.
Having listed at 100p, Martin’s shares had already risen to 129p by April 2014, when Midas recommended them. The stock dipped earlier this year on concerns about the outcome of the Election but has since staged a strong recovery to 140p.
Chief executive Ian Wilson is extremely confident about the future, intending to expand the company organically and by acquisition and he hopes to triple its size over the next few years. If everything goes to plan, the shares should continue to gain ground.
Target: Ian Wilson hopes to triple the firm’s size within a few years
Martin’s operates as a franchise business, providing franchisees with advice, support and access to lower-cost supplies and services. They pay 9 per cent of annual revenues to Martin but retain everything else.
On flotation, the group had 190 franchised outlets operating under the Martin brand. Last October, it paid £5million for Legal & General’s property franchise subsidiary, Xperience, instantly boosting the number of franchised agencies to more than 280 and taking the number of properties under management to more than 43,000.
The deal also added four new brands – CJ Hole, Ellis and Co, Parkers and Whitegates, each of which has particular regional strengths. And it increased Martin’s exposure to estate agency, where fees can be considerably higher.
The group was previously almost exclusively focused on lettings. Now about 20 per cent of its revenues come from property sales.
Wilson is convinced the multi-brand policy will prove a winner, as it gives the group access to a wider range of customers. He is on the acquisition trail and has funds to back him up, as Martin generates plenty of cash and the Xperience acquisition left him with some unused banking facilities.
Martin reports interim figures on September 9 and these should be healthy, reflecting strong sales and letting markets in the UK. Analysts expect 2015 full-year profits to increase 24 per cent to £2.6million and they are looking for a generous 25 per cent rise in the dividend to 5p.
Midas verdict: Martin & Co has done well since flotation but the best is yet to come. These shares are a strong hold.
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