Asset manager City of London Investment Group (CLIG) focuses on emerging markets, which re-rated in the first half of 2014 only to derate in the second. Against that backdrop, the group did well to grow its funds under management from $3.9bn (£2.6bn) to $4bn over the six months to December. It did so by outperforming the 8 per cent drop in the MSCI index while attracting $255m in new mandates. If the group can hit its target of winning $495m in mandates in the current half, the growth should continue.
The fund manager's investment strategy remains to target discounted emerging markets assets such as Chinese equities rather than US stocks, which the group sees as overvalued. However, revenues from non-emerging markets products are expected to increase in the next financial year. The group is targeting new mandates from the US West coast, where CLIG has had success in the past.
Reductions in commissions and custody fees paid to third parties helped boost operating profit by 27 per cent. But management maintained the dividend at 8p, noting that last year the payout was not covered by post-tax profit. The new dividend cover target is 1.2 times, based on a five-year rolling average.
Broker Canaccord expects full-year earnings per share of 25.2p, based on 21 per cent growth in pre-tax profit to £8.7m.
| CITY OF LONDON INVESTMENT GROUP (CLIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 340p | MARKET VALUE: | £91m | |
| TOUCH: | 334-340p | 12-MONTH HIGH: | 350p | LOW: 234p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 45p | NET CASH: | £8.1m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013* | 11.8 | 3.3 | 9.6 | 8 |
| 2014 | 12.2 | 4.3 | 12.6 | 8 |
| % change | +3 | +30 | +31 | - |
Ex-div: 20 Feb Payment: 6 Mar *Half-year to 30 Nov | ||||
