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Results this morning seem to evidence that COVID has provided most companies with a blame free downgrade. Estimates seem to be hugely conservative generally and whatever happens to markets the probability of forecast upgrades going forward is above average.

Hargreaves Lansdown–FY Results

Share Price 1825p

Mkt Cap £8,656m

Conflict Disclosure: No Holding 

  • Results AUA increased 5% over the year to £104bn while revenue grew 15% to £550.9m. PBT increased 11% to £339.5m. EPS up 27% to 65.9p. DPS up 31% to 54.9p. The revenue increase relative to AUM was driven by high share dealing volumes where the revenue yield on shares increased from 27bps to 43bps. On the costs side the FSCS levy increased by more than 100% to £13.7m. Outlook is strongly positioned. 
  • Estimates. Revenue is ahead of expectations but PBT in line after the extra benefit of share dealing volumes has been mitigated by the FSCS charge. Strangely analysts are forecasting declines in 2021 which is too low given AUA is up 7% and the dividend has been increased 31%. 
  • Valuation PE 31X Yield 3% 
  • Conclusion HL’s ability to charge its clients continues to surprise with the revenue yield amounting to c55bps. HL must be relieved that Robin Hood has cancelled its UK entry but the spectre of Woodford class actions continues to haunt the company. It appears that 2 law firms are readying their cases which makes this share about taking a view on the Woodford class action.

TPICAP- H1 Results

Share Price 335p

Mkt Cap £1,891m

Conflict Disclosure: No Holding

  • Results A £10m charge for unused holiday is a clue to the culture of this firm. While revenue increased 7% to £990m, the operating margin decreased 16.1% so operating profit was close to flat at £159m. PBT up 1.4% to £136m. EPS up 3% to 19.9p. Data & analytics and institutional services still accounts for only 12.8% of revenue while within global broking equities revenue was up 3% in contrast to Hargreaves experience. Outlook is cautious.
  • Estimates Full year estimates anticipate a 4% revenue increase which looks conservative as does tha pBt estimate of £250m given 55% of this is delivered in H1.
  • Valuation PE 9.3 and yield 5.2%
  • Conclusion Shares are cheap but its hard to see any catalyst to change that.

Standard Life Aberdeen–H1 Results

Share Price 263p

Mkt Cap £5,931m

Conflict Disclosure: No Holding

  • Results AUMA was down 6% to £511.8bn and fee revenues down 13% to £706m. Adjusted PBT down 30% to £195m. EPS down 16% to 7p. Impairment charge for goodwill was £1,175bn. Balance sheet has excess capital of £1.8bn. Dividend maintained but now uncovered at 7.3p.Outlook “challenging”.
  • Estimates Full year PBT estimates of £380m may already be reflecting the decline in AUM, though analysts are expecting some improvement in 2021 which could be optimistic.
  • Valuation EV/AUM 0.8%. PE 20. Yield 8%
  • Conclusion With a new CEO designate this could become interesting when he unveils his new strategy. Until then the power of negative momentum shouldn’t be underestimated.