Francis Brooke and Hugo Ure, managers of Troy Income & Growth Trust (TIGT), explain why they added price comparison site Moneysupermarket.com (MONY) during the trust's last financial year.
“Many of the holdings we have added to the portfolio over the past 12 months trade on lower yields, but have much more attractive dividend growth profiles and benefit from higher levels of dividend cover,” they said. “Moneysupermarket.com, which is one of the UK’s leading price comparison websites, is a good case in point. It is an asset-light internet business so benefits from wide margins, high returns and low capital requirements, and has no debt. On top of that, it serves a powerful social purpose by delivering better consumer price transparency. Today the business is focused on improving the retention of its customers by increasing personalisation, breadth of offering and service levels. We expect this strategy to drive meaningful market share gains and underpin continued robust dividend growth.”
At the end of September Moneysupermarket.com accounted for 0.5 per cent of Troy Income & Growth Trust’s assets.
Over the three months to 30 September Moneysupermarket.com reported that its revenue grew 4 per cent. Although its money division underperformed due to continuing challenges in product availability, energy switching remained strong due to good provider offers and large customer savings.
“[We] continued to grow in the quarter, with strong trading in energy showing that there are still big savings to be made by customers even though the price cap is lower,” said Mark Lewis, chief executive officer of Moneysupermarket Group.
The company expects that the overall trading dynamics will continue to the end of the year and the money division will weaken. But its board remains confident of meeting current market expectations for the full year.
Read Investors Chronicle's latest update on Moneysupermarket Group.
