Investment Matters

Company news: CML Group

This week First Samuel acquired a small position in CML Group on behalf of our clients.

We acquired this position via a capital raising that CML Group is undertaking to acquire 180 Group.  180 is a relatively large private player in the factoring (or accounts receivable) market in which CML Group is quickly building impressive scale and a quality business.

Upon completion, this acquisition will give CML ~14% of the factoring market (the soon to be listed Scottish Pacific has ~48% at present and CML is the next largest) but only 2% of the overall accounts receivable market (with which the banks are keen but less focused players). 

CML Group is forecast to deliver 2.5cps in FY-17 EPS, which, given our acquisition price of 15c, means we have acquired this stake on a P/E of 6 i.e. a price of six times expected earnings (i.e. it is inexpensive). 

Additionally CML is a dividend (fully franked) paying company and we have acquired this position on an expected fully franked dividend yield of ~9.5% p.a.

We see CML Group as being a great growth business (we expect >15% EPS growth into FY-18 for instance) operating in a still fragmented market which tends to do well in difficult times. 

We look forward to seeing CML grow strongly in future years, and see the listing of Scottish Pacific as helpful for creating equity market 'awareness' of this neat niche in financial services.