Albemarle & Bond Holdings

HOLD

30/09/2011 Ben Jaglom

Pawnbroker Albemarle & Bond Holdings (ABM) has benefited from the rising price of gold, growing profits by 5% for the year to June.

The AIM-50 constituent has reported pre-tax profits of £21m (2010: £20m) on turnover of £101.8m (2010: £82m.) The pledge book grew by 21% while the full-year dividend rose 6.4% to 12.5p. Profits from its gold buying operations rose by 27% to £14.6m. The store count stood at 202 (2011: 154.)

Chief executive Barry Stevenson argues the results were driven by a 'difficult time in the economy', in which demand for 'small flexible loans and instant cash has been strong' as customers experience household incomes that are 'mostly static or decreasing in real terms'.

Looking forward the group notes that it is looking to expand via the opening both of traditional stores and gold buying 'pop up' stores, adding it is also looking to do a marketing push as part of its plans to be the 'UK's first choice pawnbroker'.

Analysts at Brewin Dolphin are forecasting pre-tax profits of £23.5m, for earnings of 31.3p a share, for the year to June 2012.

Last recommended by Growth Company Investor this February at 298p the shares currently trade at 344p. It has been an excellent year for the gold buying industry as record bullion prices and widespread media coverage have emboldened numerous customers to consider pawning in their items.At the current price the shares look fairly valued. Hold.