Patient investors should take a closer look at rare books-to-fine art retailer Scholium (SCHO:AIM). Rising demand from well-heeled collectors and investment in stock to drive growth bode well for future earnings.
Buoyed by £8 million raised at its flotation Scholium has been investing in attractive new stock including a portfolio by Andy Warhol. Net assets of £10.8 million as of 31 March exceed the present £10 million market cap.
Guided by chief executive officer Philip Blackwell, a member of the Blackwell family whose roots in publishing and book selling go back to 1879, Scholium deals in rare and antiquarian books and works on paper ranging from historical maps to artistic prints. These are sold to high net worth individuals and institutions from premises in Mayfair as well as international fine art fairs.
Scholium is primed to profit in a growing, global market for rarities. Competition in selling pricey rare and antiquarian books is limited, gross margins attractive at 40% and operational gearing means sales gains will drop swiftly to the bottom line. Maiden full-year results showed a loss after one-off IPO (initial public offering) and other expenses. However, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 88% to £610,000 on sales 13.4% ahead at £6.7 million. Investors are also being treated to a maiden 1p dividend.
