Tuesday tips round-up: Mortgage Advice Bureau, Petra Diamonds

Undeterred by the wave of companies which have recently pulled their market flotations and a profit warning out from Foxtons, which operates in similar area of the housing market, Peter Brodnicki pressed the button on his own stock market listing. The former divisional head of L&G, and now co-founder of Mortgage Advice Bureau, is either brave, desperate or well-prepared. His main argument is that the current chill in markets will allow his firm to garner more attention than would otherwise be the case, even after sounding out prospective investors.

The company, which operates a network for independent mortgage brokers and might have been be expected to fetch a market valuation of between £70m and £100m in normal times, is not raising fresh equity. Rather, the company’s stock market debut is part of an exit strategy for existing shareholders. On average they are looking to dispose of 45% of their holdings. However, the firm does have a fabulous growth record. Its operating profits have sped ahead by 40% in each of the past four years and the business is scalable.

Somewhat bizarrely however, the finance director is a part-timer and the company is looking to list on the lightly regulated AIM market. The flotation will be “a real test for the wider flotations market", says The Times’s Tempus.

Petra Diamonds’ output of previous gems reached record levels during the first three months of the year but weaker prices for diamonds sent the shares lower. To take note of, the stock has risen by almost 46% over the last year. Nevertheless, softer prices for rough diamonds are a risk as it continues to invest in the expansion of its Cullinan mine, resulting in increased levels of debt. The company’s plan is to increase its production from 3.2m carats a year now to 5m by June 2018.

During the seasonally quite summer months prices for its stones slipped to an average of $134 per carat, versus guidance for $152. Despite that, revenue during the same period grew by 5% to $100.8m. Even so, “the shares are trading at 12.6 times forecast earnings and until we see prices strengthen we retain a hold", says The Daily Telegraph’s Questor column.