Great Business, But Generally Overpriced

Mortgage Advice Bureau (MAB) is a technology-driven UK mortgage network and broker, currently listed on AIM with a planned move to the London Stock Exchange Main Market in the second quarter of 2026. The company operates an appointed representative network model — it provides the regulatory umbrella, technology platform, compliance support, and lead generation, while individual mortgage advisers operate under the MAB brand.

Revenue comes from three main sources: mortgage procuration fees (commissions paid by lenders when a mortgage completes), protection and general insurance commissions (from selling life insurance, income protection, and buildings/contents insurance alongside the mortgage), and client fees (fees charged directly to customers for advice).

Revenue has grown uninterruptedly since 2012, with double-digit increases in all but two years (2020 and 2023). The company had 2,135 mainstream advisers at the end of FY 2025, up 10% year-on-year.

• UK mortgage market volumes: MAB's revenue is directly linked to the volume of mortgage lending in the UK. Total mortgage lending was £548 billion in 2025, up 19% year-on-year. However, a lot of this was front-loaded into the first half due to the stamp duty relief deadline — a one-off tailwind that won't repeat. UK Finance forecasts just 3% growth in 2026.
• Adviser headcount: More advisers equals more revenue capacity. The adviser base grew 10% to 2,135 — the first year of real growth in numbers since 2020. This signals improving confidence in the housing market.
• Revenue per adviser: This measures productivity. Revenue per adviser rose 13% to £157,000, which is encouraging.
• Market share: MAB's share of new mortgage lending was 8.4% (stable), while its share of product transfers (when customers switch to a new mortgage deal without moving house) grew from 2.7% to 3.0%.
• Adjusted versus statutory profit gap: Adjusted profit before tax was £36.3 million versus statutory profit before tax of £22.1 million — a gap of £14.2 million. The main adjusting items include amortisation of acquired intangible assets, acquisition costs, and non-cash charges. With the company pursuing further acquisitions, these adjustments are likely to persist.

Key financials

For my own adjusted figure, I add back the redemption charge (£1.8 million), non-cash fair value losses on financial instruments, and non-cash operating expenses relating to call and put options, but retain the amortisation of acquired assets and the £0.2 million exceptional cost because I think those will continue. This gives me a profit before tax of approximately £31.3 million.

My adjusted profit and loss

Market overview

A lot of the 2025 volume was front-loaded into the first half, driven by the stamp duty relief deadline. This is a one-off tailwind that won't repeat. UK Finance forecasts just 3% growth in total mortgage lending in 2026, which is not very supportive of another year of blockbuster numbers. Geopolitical uncertainty from the Iran/Strait of Hormuz crisis has added volatility, though it has also prompted some consumers to lock in rates quickly on fears of rising inflation.

The company has set medium-term targets (announced at their 2025 Capital Markets Day) to double revenue from the FY 2024 base to £533 million, with a profit before tax margin of greater than 15%. The timeline appears to be by 2029.

I think they can probably double revenue given their track record — the compounding has been consistent. If they achieve £533 million at a 12% adjusted profit after tax margin (being slightly cautious versus their 15% profit before tax target), that would imply post-tax profit of approximately £48.0 million, giving an earnings per share of roughly 82.6p.

Long-term scenario

On FY 2025 numbers, using my own adjusted basic earnings per share of approximately 40.5p with an 8% growth rate (which I consider beefy, but justified given the macro normalisation thesis), I arrive at a short-term value opportunity of −18.5%. The stock is overpriced on current fundamentals.

VALUATION SNAPSHOT (SHORT-TERM)

On balance, I'm using the short-term figure. Even the long-term opportunity of +17.3% over a three-year horizon isn't really enough — there's a lot that has to go right to achieve the revenue doubling, and the margin gap between statutory and adjusted remains wide and is likely to persist with continued mergers and acquisitions.

• Mortgage market slowdown: UK Finance forecasts just 3% growth in total mortgage lending in 2026. After a stamp duty-driven first-half surge in 2025, a return to low-growth volumes would directly impact MAB's revenue.
• Interest rate sensitivity: Higher-for-longer mortgage rates suppress housing transactions. If the Bank of England is slower to cut rates than expected, mortgage volumes could remain subdued.
• Adjusted versus statutory profit gap persisting: With ongoing acquisition activity, amortisation of acquired intangible assets will remain a recurring cost. The £14.2 million gap between adjusted and statutory profit before tax is material.
• Gross margin compression: Gross margin fell 190 basis points to 28.8%. If the revenue mix continues to shift towards lower-margin adviser types or product categories, margin pressure could intensify.
• Geopolitical uncertainty: The Iran/Strait of Hormuz crisis has added volatility to mortgage markets. If this escalates, consumer confidence and housing activity could be impacted.
• Valuation premium: The stock trades at approximately 18 times my adjusted earnings per share. For a mortgage broker — even a very good one — this is a premium valuation that leaves little room for disappointment.

• Share price below 550p: At lower prices, the value opportunity would widen meaningfully, and the dividend yield would become more attractive. This is where the margin of safety would start to appear.
• Bank of England rate cuts accelerating: A faster-than-expected rate cutting cycle would boost housing activity and mortgage volumes, directly benefiting MAB.
• Statutory profit converging with adjusted profit: If the gap narrows — particularly if amortisation charges roll off — the earnings quality would improve significantly.
• Revenue growth sustained above 15%: If the company can maintain double-digit revenue growth through a period of normalised (not stimulus-driven) mortgage volumes, it would support a higher growth rate assumption in my valuation.
• Market share gains in product transfers: The improvement from 2.7% to 3.0% is encouraging. If this continues to expand, it represents a growing, less cyclical revenue stream.