Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
Shares in Gable Holdings (LSE:GAH), the AIM-listed non-life insurance company underwriting a range of specialist commercial sector policies across Europe, have continued to make progress since I previously updated on the company towards the end of last month. This follows some positive December news flow, which I review in the following piece. I first recommended shares in this company in 12 years at t1ps – in this case in July 2006 when they traded at 18.5p. Since departing t1ps in September, I have updated in October (shares at 31.5p) and then last month (shares at 39p) – noting on both occasions that the share price looked to have a good way to go. Now at 41.5p, the following summarises my current thoughts…
You can read my last detailed piece on Gable here
Gable added to its positive operating (and share price) momentum with a 5th December announcement of its largest commercial agreement to date – a 5 year partnership, from January 2013, with Towergate Underwriting, the UK’s largest Managing General Agent (insurance intermediary). This will see Gable provide exclusive capacity for a range of non-standard products which will be available to all of Towergate Underwritings’ broker customers, with Gable noting “the partnership is projected to result in a minimum of £14 million per annum gross written premium”.
Following also last month’s announcement of new business agreements projected to add in excess of £10 million in annualised gross written premium in Denmark and the UK, Gable’s house broker Panmure Gordon has increased its earnings per share forecasts by approaching 18% for 2013 (to 8.75p from 7.43p) and by more than 13% for 2014 (to 11.2p from 9.9p). For 2012, 5.63p (an underlying pre-tax profit of just over £7 million) remains pencilled in – up from 3.89p (£4.68 million pre-tax profit) in 2011. Even an earnings multiple of 8x – low I would argue considering the company’s strong underwriting track record, clear positive current momentum and growth potential – now suggests a forward share price of 70p, rising towards 90p. This is also before considering the balance sheet backing of strong net cash and net tangible asset positions.
Further support for the view that these shares remain materially undervalued has been provided by an announcement that Chief Executive, William Dewsall, yesterday acquired a further £20,750 of shares in the company at 41.5p each – taking his shareholding to 22.10% of the shares in issue. I continue to believe there will be significant long-term gains for shareholders here from anywhere around current share price levels. This stock is a buy
Tom Winnifrith will be speaking with the UK’s best Known Master Investors at the UKInvestor Show on April 13th. To hear men like Nigel Wray (Britain’s Buffett), Nick Leslau (the secret millionaire), Evil Knievil, Lucian Miers, Roger Lawson and Dominic Frisby plus to meet the CEOs of growth companies like Leyshon Resources, Northern Petroleum and Stanley Gibbons this is the ONLY show to go to.
