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21 July 2020

Intermediate Capital -Trading Update

Share Price 1407p

Mkt Cap £4,086m

Conflict Disclosure: No Holding 

  • Update AUM up 1% over the 3 months to June to €45.6bn of which third party AUM is €36.4bn (80%). €1.2bn of new money was raised which accounts for 2.6% of total AUM implying valuation falls of 1.6%, and the statement suggests a resumption in realisations indicates a valuation recovery to pre Covid levels.
  • Estimates 6% decrease in NAV to £1,225m is expected to March 21. 
  • Valuation Last year fund management profits were £183m while the investment company made a loss. If we valued the investment company at NAV we get £1.2bn implying the €36.4bn of AUM are valued at less than 1%. PE however looks expensive at 21X as few earnings are forecast from the investment portfolio.
  • Conclusion The company could well have a strong 12 months ahead particularly if we enter an inflationary world. And the shares look cheap. Bit its hard to buy these at 1400p when the CEO acquired stock at 503p in March.

30 January 2020

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Intermediate Capital Group – Q3 Trading Update 

Share Price 1720p

Mkt Cap £4,995m

Conflict Disclosure: No Holding

  • Update AUM is up 4% in the 3 months to September while third party AUM is up 5% over the quarter. Performance fees, which are weighted to the end of a fund’s life are expected to grow over time and are expected to add 10-15% to management fees currently. The balance sheet portfolio was £2.3bn.
  • Estimates A significant increase (47%) in PBT is expected in the current year on the back of last year’s 29% increase in AUM. This is forecast to reduce to 9% growth to March 2021 which looks highly likely to be too low given AUM are up 15% over the first 9 months of this year.
  • Valuation PER 18.6X yield 3%. The NAV is £1.4bn delivering an 18% ROE so the shares trade at 3.5X book value.
  • Culture Highly paid and highly incentivised. It gets highly reviewed on glassdoor at 4.4 with 100% approval of CEO.
  • Conclusion I have always been nervous of the highly paid culture but the company is delivering and looks set to continue to deliver while it is inexpensive.  Looks like an effective compounder.