Shares - - TALKING POINT -

It’s hard to es­cape talk of Brexit un­cer­tainty and po­ten­tial growth slow­ing on a global scale as we en­ter 2019. So a com­pany at the top of its struc­turally grow­ing mar­ket, one that is po­ten­tially in­su­lated from eco­nomic wob­bles and ca­pa­ble of ex­pand­ing for years to come, should be at­trac­tive.

GB Group (GBG:AIM) is a rare Bri­tish-made world leader at the heart of the dig­i­tal trans­for­ma­tion.

We all know that peo­ple are em­brac­ing the in­ter­net at a rapid pace, from the on­line shop­ping ex­plo­sion to book­ing travel, buy­ing ser­vices and much else. Ch­ester-based GB pro­vides iden­tity data in­tel­li­gence and lo­ca­tion in­sight, essen­tially giv­ing pri­mar­ily busi­ness-to-con­sumer cus­tomers and govern­ment or­gan­i­sa­tions the in­for­ma­tion re­quired to de­cide who to trade with, who to block, and fraud pre­ven­tion all within a com­pli­ance-friendly plat­form.

Di­vided into two di­vi­sions – Lo­ca­tion and Cus­tomer In­tel­li­gence and Fraud, Risk and Com­pli­ance – the com­pany has what some an­a­lysts have called un­par­al­leled and com­pli­ant ac­cess to data from more than 500 dif­fer­ent sources. Th­ese in­clude ar­eas like credit ref­er­ence agen­cies, elec­toral rolls, pass­port and na­tional ID reg­is­ters, postal ser­vices, re­tail con­sumer data and so­cial me­dia.

Staffed by more than 800 peo­ple in 18 coun­tries, GB now counts in ex­cess of 18,000 cus­tomers for in­dus­tries as di­verse as fi­nan­cial ser­vices, gam­ing, travel and re­tail.

It re­mains largely a UK com­pany with two thirds of last year’s £119.7m rev­enue earned in its own back­yard. That is chang­ing, partly through or­ganic means but also via care­fully se­lected ac­qui­si­tions, such as Vix Ver­ify in Aus­tralia in Oc­to­ber.

Last year just 2% of rev­enue was earned in Aus­tralia and 10% from the vast US mar­ket, and it is this global ex­pan­sion that rep­re­sents the other core growth driver of the busi­ness be­yond the con­sumer switch to on­line every­thing. Re­cent mo­men­tum along th­ese lines has been en­cour­ag­ing.

GB doesn’t have the mar­ket to it­self. Key com­pe­ti­tion comes from large credit check­ing agen­cies, such as UK-based Ex­pe­rian (EXPN) or Equifax in the US. GB’s view is that its deeply lay­ered and in­ter­na­tional datasets, plus adapt­able tech­nol­ogy plat­form, give it a key edge.

The stock is also not cheap, a point that will put off some in­vestors. The price-to-earn­ings mul­ti­ple for the year to 31 March 2020 cur­rently stands at 28-times.

Yet this is based on fore­casts that an­a­lysts ad­mit may be on the con­ser­va­tive side, with Nu­mis say­ing ear­lier this month that it ex­pects an ac­cel­er­a­tion on the high sin­gle-digit rev­enue growth and 19% oper­at­ing mar­gins cur­rently fore­cast. It an­tic­i­pates a 600p share price over the next year.


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