- Solid levels of recurring revenue
- Accounting gains flatter profits
Results for specialist wealth and asset manager Mattioli Woods (MTW) reflected the company’s generally solid recurring revenues, plus inflows during the half of £326mn, which increased the total discretionary assets under management to £4.6bn.
Despite this performance, total assets stayed level at £15.2bn, with some market impact seen on total ad valorem (derived from an assessed value) fees. Recurring revenue, based on the company’s annual management fees, made up over 90 per cent of interim revenue at £59.1mn, which increased organically by 4 per cent due to the fees generated by its advisory business.
Pre-tax profits were 60 per cent higher at £7.6mn, although the majority of this increase was due to one-off accounting gains based on lower deferred consideration payments. On an underlying basis, pre-tax profits were up 15.6 per cent to £15.6mn.
Overall, the company is on track to meet its full-year trading targets, according to management. This seems to have bolstered what had been an erratic share price performance over the winter, as the company first struggled after peer St James’s Place (STJ) was forced to revise its charges in light of new FCA rules, then benefited from the expectation of base rate cuts.
In the meantime, Mattioli Woods can get on with building its niches in advised work and generating solid levels of recurring income. Consensus earnings compiled by FactSet currently give the shares a rating of 12.3 for 2024, which is a mild premium to the total wealth and asset management sector. We still think the company’s solid earnings profile justifies that rating and we maintain the current recommendation. Buy.
Last IC view: Buy, 624p, 12 Sep 2023
MATTIOLI WOODS (MTW) | ||||
ORD PRICE: | 582p | MARKET VALUE: | £302mn | |
TOUCH: | 580-600p | 12-MONTH HIGH: | 660p | LOW: 481p |
DIVIDEND YIELD: | 4.6% | PE RATIO: | 30 | |
NET ASSET VALUE: | 437p* | NET CASH: | £29.7mn |
Half-year to 30 Nov | Turnover (£mn) | Pre-tax profit (£mn) | Earnings per share (p) | Dividend per share (p) |
2022 | 54.9 | 4.79 | 5.90 | 8.8 |
2023 | 59.1 | 7.65 | 10.2 | 9.0 |
% change | +8 | +60 | +73 | +2 |
Ex-div: | 15 Feb | |||
Payment: | 22 Mar | |||
*Includes intangible assets of £205mn, or 395p a share |