Strategic growth targeting £200m revenues by FY27

We review the potential for the group to push top line revenues towards c £200m pa over the next three to five financial years vs our £135m FY24e estimate. BEG recently issued a Q3 update which confirmed that it is trading in line with market forecasts.

Over the last decade Begbies has built an increasingly broad financial services and advisory business that can perform across the economic cycle. We expect recognition of that profile to grow and evolve to reflect recognition of the value inherent in a broad portfolio of services and solutions for UK corporates.

A well-tested investment template of combining organic growth with acquisitions has enabled the group to identify and secure many deals on earnings accretive terms over the past decade, complete their integration and deliver predicted contributions to earnings.

The shares have recently lagged the pace of growth in reported earnings, despite positive shareholder returns since it initiated the acquisition strategy around a decade ago. We believe that this reflects a general derating of UK small caps and financials on lower equity volumes.

There is no change to our assessment of the group’s current fair value, still seen at 175p / share.