Brokers' views: Edison Investment Research

Edison has initiated coverage on credit hire and accident management solutions provider AI Claims Solutions – currently with a £13 million market cap at 21.75p per share – with a positive missive. The paid-for research house expects ‘further strong growth’ on the back of AI’s ‘expanding distribution platform and sustainable business model’, as well as ‘at the expense of competitors in a very difficult market environment’.

Believing the AIM-quoted group’s low-cost, lean balance sheet model makes it ‘easier to deal with industry margin pressures’, Edison forecasts an improved £2.4 million pre-tax from AI Claims for the year to June 2010, ahead of £3.5 million next year. Based on forecast earnings of 2.8p and 4.1p, the shares are trading on a single-figure p/e, a valuation that Edison argues represents an unjustified discount to peers ‘on all measures’ and ‘seems not to reflect the growth opportunity’.

Play it again, SAM

Light is also shed on another AIM counter, Syndicate Asset Management (SAM), the holding company for businesses including Ashcourt Rowan and Savoy. Edison reminds investors that the lately loss-making SAM – whose shares swap hands at an unloved 1.74p, valuing the group at £33 million – was widely expected to fail early in 2009 having ‘over-extended the balance sheet and management controls with a spree of acquisitions’. 

However, restructured under new management and armed with £33 million of fresh equity, SAM generated a £300,000 profit in the first quarter to June and ‘provides investors with a turnaround story, an exposure to equity gearing and a play on small wealth/asset management consolidation’.