WH Ireland

LONG-TERM BUY

18/07/2011 Miles Nolan

Against a challenging market, well established stockbroker WH Ireland (WHI) has reported a return to profitability, driven by higher revenues and tight cost control.

In the six months to May sales increased 30% to £11.4m helping the group report an adjusted pre-tax profit of £1.48m (2010: £590,000 loss). The AIM counter also offloaded its 37% stake in Australia based broker Carmichael, for a cash sum of £785,000.

The new management team, led by ebullient chief executive Paul Compton have done a sterling job in turning WHI around, the result of which is the repayment of its overdraft and a resultant net cash position. In an interview with Growth Company Investor Compton said 'we are in good shape and the second half has started very well'. The recently established market making arm has remained profitable, and WHI continues to pick up new corporate clients.

Having raised £45m for clients in the first six months, WHI has since raised a further £20m, a large chunk going to AIM hopeful Spectra Systems. Acquisitions are unlikley but Compton is keen to pick up skilled employees, particularly in wealth management. Total funds under management jumped 10% to £1.8bn and the forthcoming changes in EIS legislation are likely to bring plenty of opportunity for WHI.

A dividend is not top of the agenda but WHI may well buy in more of its own shares. There are no forecasts in the market but a same again performance for the second half would lead to a profit for the year of £3m. Following the rally in the share price over recent weeks, we rate WHI as a long-term buy.