Despite strong performances from Man's (EMG) AHL funds last year, chief executive Manny Roman said he did not expect to see a meaningful pick-up in demand for the group's flagship products until later in 2015. This, combined with a slowdown in sales across its discretionary strategies and the ongoing volatility of markets, makes him "cautious" in the near term.
The hedge fund business reported a 62 per cent increase in pre-tax profit to $481m (£310m) - well ahead of consensus estimates - thanks to higher performance fees for its AHL range and cost savings. Funds under management grew 35 per cent to $72.9bn, and the group is set to buy back $175m of shares.
However, analysts at Numis Securities warn that over the next five years a shift towards less profitable products will erode the margin, resulting in flat earnings from management fees. "For every $1 lost from high-margin products, Man needs to sell roughly $3-$5 of lower-margin product to offset the impact, so it will have to run flat out in sales just to stand still in profits." The broker expects a fall in pre-tax profit this year to $245m, giving EPS of 12¢.
| MAN GROUP (EMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 191p | MARKET VALUE: | £3.4bn | |
| TOUCH: | 190-191p | 12-MONTH HIGH: | 197p | LOW: 83p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 139¢* | NET CASH: | $589m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 1.35 | 540 | 25.1 | 44 |
| 2011 | 1.66 | 320 | 14.2 | 22 |
| 2012 | 1.30 | -748 | -45.8 | 22 |
| 2013 | 1.16 | 56 | 3.0 | 7.9 |
| 2014 | 1.15 | 384 | 20.8 | 10.1 |
| % change | -1 | +586 | +593 | +28 |
Ex-div: 23 Apr Payment: 15 May £1=$1.55 *Includes intangible assets of $1.6bn or 91¢ a share | ||||
