Diversification and track record merits higher rating

Begbies’ H1'25 revenue growth of 16%, including 11% organic growth, is testament to management’s strategy of broadening its professional service offer, increasing the group’s resilience and expansion opportunities. Having delivered a six-fold increase in Adj. PBT over the past decade, and an impressive 16% in H1'25, we see Begbies’ valuation derating as unwarranted.

Begbies delivered another admirable all-round performance in H1’25 with its business recovery and advisory services achieving 12% organic growth, augmented by its property advisory services expanding by 24% (8% organically and 16% from the consolidation of SDL Property Auctions and Andrew Forbes valuations practice). This led to a 30bps improvement in group operating margin to a high 16.5%. The group increased free cashflow pre-acquisition payments by 8% to £4.3m and ended H1'25 with a robust balance sheet. 

In our view, Begbies is well positioned for growth as insolvencies and financial distress remain elevated and its property services have excellent momentum. Yet its shares have fallen c.20% in the past year and trade at a c.35% discount to its long-run average valuation multiples.

Trading on only c.9x calendar 2025 PER, we see scope for a significant rerating in the shares to trade on 14x cal 25 PER and a 3% dividend yield – the ratios at our Fair Value of 145p/share.