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10 March 2020

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M&G – FY Results 

Share Price 172p

Mkt Cap £4,482m

Conflict Disclosure: No Holding

  • Results Net outflows in Savings and Asset Management of £1.3bn though overall AUM increased from £321m to £352m. Adjusted operating profit of £1,149m (2018 £1,621m) is said to be “in line with expectations. Outlook is “positioned to grow in a changing market”.
  • Estimates Going forward £887.4m is expected in the current year.
  • Valuation PER 4.5X, Yield 9%.
  • Culture The gender balance is 56% male and the pay gap is 30%. “ A great place to work” is the title paragraph before the outlook statement.
  • Conclusion The company is “positioned to grow” but the only growth appears to be in markets.  Which is why the shares are very cheap. Heritage declined 36% and net outflows mean it isn’t easy to see underlying outperformance despite the value in the shares. Particularly with a strong brand. The only catalyst I can imagine could be a split of the business.