[Shortlist] Mortgage Advice Bureau (Holdings) plc (MAB1 LN)
You highlighted a potential opportunity in MAB1. What’s your suggestion?
Shortlist MAB1.
The shares sold off in early September 2026 after management cut guidance. The market sees it as a lousy cyclical housing business.
However, my preliminary research suggests the market is over-extrapolating the headwinds and under-estimating the quality of its business.
Liquidity?
29 Sep 2026
Share price: GBP 3.61
Market capitalisation: GBP 208 mn (USD 275 mn)
Enterprise value (EV): GBP 211 mn (USD 279 mn)
Average daily volume (ADV): GBP 1.2 mn (USD 1.5 mn)
NTM P/E: 8x
What does MAB1 do?
MAB1 is one of the largest mortgage networks in the UK. It provides regulatory oversight, software, and lender access to mortgage advisers.
Mortgage procuration fee is the largest revenue stream. It accounts for 42% of revenue in 2025.
Here’s how it works.
A homebuyer approaches a mortgage adviser. The adviser uses MAB1’s software to help the homebuyer assess affordability, the best mortgage lender, etc. They then apply for the mortgage via MAB1’s software.
After the lender disburses the mortgage, it pays a commission to MAB1. MAB1 recognises the entire commission as revenue and the adviser’s cut as its cost of sales.
The other two revenue streams are Protection & General Insurance Commission (37% of total revenue, +12% YoY) and Client Fees (19%, +20% YoY).
The former involves cross-selling insurance while the latter refers to fees paid directly by home-buyers for mortgage advice.
In 2025, MAB1 grew total revenue by +20%. This was driven by +6% growth in number of mortgage advisers and +13% growth in revenue per adviser.
Good business, temporary headwinds
What are the headwinds? Why do you think they are temporary?
First, let me explain how investors view the business.
MAB1’s total return highly correlates with Persimmon Plc (PSN LN), one of the UK’s largest homebuilders.
That’s because MAB1’s revenue is driven by number of mortgages approved. When mortgage approvals fall, number of homes sold also falls.
I overlaid MAB1’s total return on the number of mortgage approvals in the UK. Generally, when mortgage approvals are up, share price responds accordingly.
Sorry for the congested chart. This was the best result Gemini could give me.
Source: Bank of England (2026); Tikr
In early Sep 2026, MAB1 cut its profit guidance. Mortgage approvals were lower than expected. Share price collapsed.
Around the same time, PSN’s shares jumped.
Why is there a divergence?
On 26 September 2026, the UK government announced ‘Your First Home’, a scheme to help first-time homebuyers get mortgages on new homes.1
More mortgages => more homes sold.
That’s good for both MAB1 and PSN right?
Yes.
But the muted reaction from MAB1’s investors suggests they have not fully recognised this: MAB1’s headwind is temporary and lifting.
How is this showing up on their valuation?
Here’s the historical NTM P/E chart:
Before 2026, investors had always valued MAB1 (orange) more than PSN (green).
MAB1 is a higher quality business. MAB1 earns 9% return on asset (ROA), superior to PSN’s 5%. It doesn’t need to invest in inventories, receivables and equipment. In fact, it carries negative working capital. Suppliers provide funding.
Nothing much has changed about its business. That’s why I believe MAB1 should continue trading at a higher P/E than PSN.
What can close this valuation gap?
Potential sale
MAB1 fits the profile of a takeover target.
Capital-light and high free cash flow conversion. It is trading at ~ 10% free cash flow yield. Net debt is immaterial, so it has the ability to take on more debt.
The industry is fragmented and looks ripe for consolidation. Despite being the top player, MAB1 holds only ~ 8.4% market share.2
CEO and founder Peter Brodnicki is the largest single shareholder, holding ~18% of shares outstanding.
He is already 64 years old but has no clear successor. At one point, he considered Yaiza Luengo, the then-COO, his successor.3 But she left in May this year without a replacement.
MAB1 hired a new CFO in July 2026: Jo Stent. Although it was many years ago, she has experience in M&A through her role as a M&A Lead Advisor in Deloitte.4
Finally, MAB1’s NTM P/E is at all-time low of 8x. Such attractive valuation will likely attract buyers. With a high enough premium, the CEO/founder may be inclined to sell and enjoy his retirement.
Risks
What is the risk of Meta’s Muse replacing mortgage advisors?
Likely low risk.
First, providing mortgage advice is not simply comparing mortgage rates and recommending the lowest rate. If this is true, mortgage comparison websites would have made mortgage advisors obsolete a long time ago.
Customers use mortgage advisors to handle complexity. Advice is particularly useful for self-employed applicants, contractors, buyers with historic credit issues, etc.
Generative AI, being trained on historical data, often hallucinates when presented with unprecedented complex cases.5
Second, mortgages are not like mobile phone bills and gym memberships. The stakes are much higher.
In Nov 2025, L&G’s survey showed that just 7% of consumers would be comfortable using automated tools to arrange their mortgage, and only 5% would opt for AI chatbots.6
Finally, providing mortgage advice is an activity regulated by the Financial Conduct Authority (FCA).
That’s a key yet under-appreciated difference between MAB1 and other businesses like Expedia Group, Inc. (EXPE 0.00%↑ US), Booking Holdings Inc. (BKNG 0.00%↑ US) and Rightmove plc (RMV LN).
Coming up next
Next week, I’ll be back with 2 to 3 more interesting ideas.
I’ll then analyse the most voted idea from my last post.
Right now, that’s Li Ning Company Limited (2331 HK). Dr. Martens plc (DOCS LN) is the runner-up.
Haven’t voted yet? Check out my last post: Yet Another 2 Attractive Ideas
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Published by Andrew Wong, ACA, CFA
Disclaimer
This publication is for informational, educational, and entertainment purposes only and does not constitute financial, investment, legal, or tax advice. The content herein is a record of my personal research and investment process, and all analysis, forecasts, and opinions expressed are solely my own.
I make no representation or warranty, express or implied, as to the accuracy, completeness, or timeliness of the information provided. The stock market is highly volatile, and my forecasts, estimates, and assumptions may prove incorrect.
I am not acting as your financial advisor or fiduciary. You should not rely on any information in this publication to make investment decisions. Under no circumstances will I be held liable for any direct, indirect, or consequential losses or damages arising from your reliance on the content of this publication.
At the time of publication, I am long MAB1 LN. I may change my views, predictions, or personal portfolio positioning at any time without notice.