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9 July 2020

Premier Miton – AUM Update

Share Price 103p

Mkt Cap £162m

Conflict Disclosure: I Hold

  • Update AUM up 12% over the 3 months to £10.3bn. Net outflows were 1.1% largely from the multi asset funds while equities experienced net inflows. Two new team hires. A fixed income team t join from Merian and a Global Smaller Companies fund manager to join from Aberdeen Standard with fund launches expected in the autumn.
  • Estimates AUM is 11% down on the June 19 pro forma figure. H1 revenue was £33.5m which had only 4 months of the merged entity, so the £64m FY revenue expectation looks undemanding.
  • Valuation EV/AUM 1.4%. PE 9.4 Yield 5.6%
  • Conclusion Hugely cheap with a tailwind from merger cost savings and seeds being sown for growth but net outflows, while slower, continue. The potential upside when the company returns to net inflows is very high, but some patience may be necessary.

22 May 2020

Premier Miton – H1 Results

Share Price 100p

Mkt Cap £158m

Conflict Disclosure: I Hold

 

  • Results Net outflows were 3.5% over the half and AUM was £9.145bn at 31 March but in the month of April has increased 8.5% to £9.9bn. Fee margins of 67.4bps gave revenue of £33.4m and adjusted PBT was £12.2m, a 36% operating margin. There are £7m of synergy cost savings to come over the next 2-3 years which would imply a pro forma margin of 47%. Cash was £29.3m, a little ahead of the £20.6m NTAV. Outlook “well placed”

 

  • Estimates FY estimate is predicated on £65m revenue which assumes a 7% decline in H2. Given AUM is down 12% on a pro forma basis over H1 this may be a little full.

 

  • Valuation EV/AUM 1.4%. PE 9.4X Yield 5.6%

 

Conclusion With the increased scale and the potential of those high margins post £7m cost savings the valuation upside is significant if flows can turn positive. While it doesn’t yet have momentum the upside risk is out of proportion to the downside risk. The shares have halved in 12 months. I have more confidence in this as a recovery play than Jupiter

9 April 2020

PremierMiton– Trading Update
Share Price 92p
Mkt Cap £144m
Conflict Disclosure: I Hold

Update –. Net outflows of 1.5% in the quarter is an improvement on the 3 months to December but market falls have resulted in AUM reducing by 21% over the quarter to
£9.15bn. Cash is £29.3m. Merger integration is on track for harmonisation during 2020. Senior management salary reductions have been made. New dividend policy of 50%-65% of adjusted PAT. The quarterly payment is therefore reduced to 0.75p. In future dividends will be half yearly.

Estimates – The £64m revenue forecast was based on the Q1 AUM of £11.2bn, so this is likely to come down. There is some cost savings so not all will flow to the £19m PBT bottom line. If the 10.2p EPS forecast came down 15% we may get a dividend of 4.5p-5.5p.

Valuation EV/AUM 1.3%. If (which is a big IF) earnings were 8.7p the PE would be 10.5X and yield c. 5%

• Conclusion The share price has lagged other in the sector to recover and the net outflows may not be as bad as the market feared. Early days but with new funds launched this could be a turning point. However, with fund managers the power of momentum shouldn’t be underestimated so I find its best to treat them as momentum investments. Shares have rallied 30% off their lows but are extremely cheap.

 

10 January 2020

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Premier Miton – AUM Update 

Share Price 172p

Mkt Cap £272m

Conflict Disclosure: I Hold

  • Update: Net  outflows of 2% over the 3 months to December compares to Polar outflows of 4.4% and Liontrust inflows of 4.8%. Market tailwinds added 4.6% lifting AUM to  £11.6bn at 31 December. Outlook refers to more confidence in the market and progress in creating the management structure post merger and planned synergies from the merger are now underway.
  • Estimates PBT is expected to be £26.6m in the year to Sept 2020 which is expected to rise 16% in the year to 2021 off the back of 6% revenue growth evidencing the cost savings coming through
  • Culture I suspect that the combination of the Guildford based Premier and the city based Miton may result in a more liberated culture.
  • Valuation PE 12.1X for September 2020, falling to 10.7X Sept 2021. Yield 6.1%. EV/AUM 2%
  • Conclusion This is the value play in the space and for a while will remain a cost cutting story. In the short term there is more to be made in the momentum stock of Liontrust but I just can’t help but be attracted to value. A little patience may be required until flows resume post merger. But with Jupiter trading on 14X the value is there. Only M&G is cheaper at 6.3X with a similar 6.1% yield.

28 November 2019

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Premier Miton Group – FY Results 

Share Price 168p

Mkt Cap £266m

Conflict Disclosure: I Hold

  • Results This is effectively Premier results as the merger occurred on 14 November. AUM of £6.6bn was modestly down over the year from £6.9bn with net outflows of £233m. Revenue was close to flat at £48.66m representing an average fee margin of 72.3bps. Underlying PBT was £19m (2018 £18.9m) and underlying EPS was 15.99p (2018 14.66p). Cash was £20.7m and EBITDA margin 39.5%. Outlook is well positioned for future growth.
  • Estimates The result looks to be ahead of consensus. Numis had £18.1m in for 2019 and £19m was delivered. A 35% increase to £24.5m is expected in 2020 which is a reduction in EPS to 13.3p before £9.8m of exceptionals.This assumes net outflows of £840m and market performance of £729m. Over the subsequent 2 years EPS is expected to increase to 18.4p assuming 1.4% net inflows in 2021 and 6% in 2022.
  • Valuation PER 12.6X, Yield 6.3%. EV/AUM 4.7%
  • Conclusion The PER falls from 12.6X to 9.1X over the next two years on modest assumptions. This has been year of weaker performance and net outflows. If investors believe performance and flows can recover there is significant upside.

10 October 2019

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Premier Asset Management – Trading Update

Share Price 176p

Mkt Cap £187m

Conflict Disclosure: No Holding

  • Update Net outflows in the quarter were 3.6% while AUM was down 2.7% to £6.56bn. Second quarter of outflows following 24 quarters of inflows. Merger with Miton now approved by shareholders expected to be effective 14 November.
  • Estimates The £18.5m PBT expectation for the current year is based on £7bn of AUM which looks a little toppy now the year has ended with AUM at £6.56bn.
  • Valuation Per 12.4X Yield 5.9%. EV/AUM 2.5%
  • Conclusion Not a great quarter but this won’t be about inflows while the company is undergoing a merger which creates 27% cost synergies. Hard to see any catalyst just now but as the synergies are delivered the shares may start looking extremely cheap.

11 September 2019

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Premier Asset Management

Share Price 167p

Mkt Cap £177m

Conflict Disclosure: No Holding

  • Deal A good example of these markets is Premier Asset Management who announced a merger with Miton last week.  The deal included £7m of cost synergies before we start to consider some distribution benefits. In the context of Premier’s £18m PBT estimate for September 2019 and Miton’s estimated £8.3m PBT to December 2019 this is a reasonably material cost saving number. Given the new company will be 70% Premier, 30% Miton the cost saving alone could be 27% enhancing to Premier shareholders.  Admittedly it takes 3 years to deliver the savings but the shares are entirely unchanged since the deal.
  • Conclusion Possibly the market doesn’t think the cost savings will come through. Possibly the increased liquidity in the stock, the increased diversity of the funds and the distribution synergies will amount to nothing.  Or perhaps the share price is wrong.  While I am sure some will find it depressing, but for those with a more sunny outlook on life it may be an opportunity. 

9 July 2019

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Premier Asset Management – Trading Statement 

Share Price 200p

Mkt Cap £205m

Conflict Disclosure : No Holding

  • Statement  After 23 quarters of net inflows modest net outflows of £55m have been experienced. 12 month net inflows look healthy at £133m. AUM was £6.7bn (March 19 £6.8bn)
  • Estimates A modest decline in revenue to Sept 19 is forecast which does produce a 16% PBT increase to £18.6m. EPS 14.4p and Dividend 10.3p
  • Valuation EV/AUM 2.7%. PER 11.4X Yield 6.1%
  • Conclusion Shares are down 28% over 12 months indicating the weaker performance has been anticipated.  Even Jupiter is now trading at 14X. As soon as some better fund performance is posted I expect the shares will bounce back strongly. In the meantime it must be very sad to break a 23 quarter run of inflows.

9 April 2019

Premier Asset Management – Trading Update 

Share Price 204p

Mkt Cap £209m

Disclosure: No holding

  • Update Net inflows were modest at £3m over the 3 months to 31 March but just enough to claim the 24th successive quarter of net inflows bringing AUM to £6.8bn. AUM was up 6.4% overall with help from markets from £6.4bn at December.
  • Estimates look for a modest reduction in revenue for the year to September 2019 which looks a bit harsh given AUM are up 6% year on year at March. Perhaps a function of having results in the grey days of November
  • Valuation EV/AUM 2.75%. PER12.3X yield 5.6%
  • Conclusion Shares are down 35% from the 310p high last July. That’s the time to buy these fund managers. The only hesitation is that the statement says they have good long term investment performance which is akin to saying short term performance is weak.

10 January 2019

Premier Asset Management – Q1 Update 

Share Price 182p

Mkt Cap £187m

  • Update AUM was £6.4bn with net inflows for the quarter of £65m
  • Estimates Revenues for the year to Septmeber 19 are expected to be modestly up at £54,2m which provides 6% adjusted EPS growth as when results were announced in November AUM stood at £6.6bn despite against an average of £6.5bn over the year to September 18.
  • Valuation PER 11 yield 6.3%. The shares are 40% down from their high of 303p when they simply got too expensive.
  • Conclusion These shares are too cheap. Performance is strong and there are no performance fees in the numbers.

29 November 2018

Premier Asset Management – FY Results

Share Price  202p

Mkt Cap £213m

  • Results Adjusted PBT up 28.6% to £18.9m, EPS up 41.7% to 12.1p, the quarterly dividend is up 28% to 10.25p. The outloo says flows have been slower in the new year as markets have become tougher.
  • Estimates These results look very modestly ahead of consensus but given slower flows noted forecasts may not change at this stage
  • Valuation PER 12.4 and yield 4.95%
  • Conclusion The shares are 33% down from the high in July and now look reasonable value subject to markets

9 October 2018

Premier Asset Management – Trading Update  

Share Price 255p

Mkt Cap £270m

·         Update Net inflows of 1.8% were mitigated by dull markets so AUM grew 1.4% over the period to £6.9bn bringing the landmark 20th quarter of successive net inflows.

·         Estimates Consensus looks for 28% PBT growth to £19m for the year to September 2018 which compares to 13% AUM growth achieved which is 15p EPS from which a 10p dividend is expected. Going forward 19% EPS growth is anticipated in the year to Sept 2019

·         Valuation EV/AUM is 3.6%. PER 14.2X Sept 19 EPS and 4.7% yield

·         Conclusion  The shares have come back from the 310p peak and now look reasonable value.  Liontrust and Miton remain cheaper however.