FoggyIsle.XYZ | Market's view on Keystone Law G.

William Robins, director of operations and compliance, has sold a significant portion (72%) of his shares, leaving him with 168k shares.
KEYS reported robust results revealing a solid business model with a key growth driver being the recruitment of high calibre lawyers, leading to an 8.5% growth in Principal Lawyers in FY24. Revenue increased by 15%, with widening margins and gearing contributing to a 23% growth in PBT, although the actual EPS growth was limited to 13% due to an increased tax rate.
The company noted that net interest income from client funds has become a new revenue line due to current high interest rates, highlighting the firm’s adaptability to market conditions.
KEYS is described as a capital-light, growth-oriented, and prodigious cash generator with a strong future outlook and a high cash conversion ratio, suggesting financial robustness and potential for increased dividends.
Concerns were raised about potential overseas takeover bids given the company’s solid performance but relatively low share price.
The stock was noted to be performing well despite broader market neglect of UK small caps, with predictions of eventual market correction leading to a PE expansion.
Strong recruitment activity was noted, with a significantly higher pace of hiring since the start of 2024.
A general sentiment of frustration was expressed regarding the stagnation of share prices despite strong company performance and fundamentals.
Positive updates and strong result announcements were noted along with high confidence in the company’s performance continuing to exceed market expectations, highlighted by strong hiring and billing metrics.
The company was noted for its debt-free status and strong cash conversion, which positions it well in an environment of higher interest rates.
A strong performance was expected to continue based on the latest financial results and business model strengths, which could potentially lead to surpassing current PBT forecasts.