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Liontrust signals confidence

Judging by the fund manager's recent track record, forecasts for net flows of £2.9bn in FY2022 look beatable
November 25, 2020
  • Net flows to sustainability-focused fund manager remain strong
  • Management signals confidence with dividend 22 per cent hike
IC TIP: Buy at 1,450p

Aside from statutory profit figures – dented by acquisition costs and amortisation of intangibles – the key items in Liontrust Asset Management’s (LIO) half-year numbers were flagged well in advance.

Assets under management and advice (AuMA) rose 28 per cent to £20.6bn, thanks to the sharp recovery in asset prices and investor sentiment from the end of March. Both fiscal quarters also saw positive flows into funds, with retail investors accounting for £1.6bn of the £1.75bn across the full period.

That is quite a feat for a sub-£1bn fund group, in both absolute and relative terms: in the three months to September, Liontrust had the sixth-highest net retail sales in the UK.

This has continued since the period-end. As of 20 November, AuMA was at £28.1bn thanks to another positive run for markets and the on-boarding of £5.6bn of assets from the acquisition of Architas. Though a repricing of toppy markets could yet end a stellar run for the asset pile, management confidence in the outlook is reflected in a chunky dividend increase.

Consensus forecasts are for earnings of 63.6p a share this year and 80.8p in FY2022, reflecting what now look like dated period-end AuMA estimates of £28.2bn and £32.9bn, respectively.

Indeed, as we recently noted, Liontrust’s distribution power and fund performance has consistently outperformed City expectations. The downside to this is that the market inevitably wants more. Analysts now predict net flows of £2.9bn in the 12 months to March 2022 – a figure equal to more than a tenth of forecast opening net assets.

Few active managers face such a bar. But then again, few active managers are as well placed to benefit from investor desire to ‘build back better’ as Liontrust. This year’s track record suggests current forecasts are beatable. Buy.

Last IC View: Buy, 1,285p, 22 Oct 2020

LIONTRUST ASSET MANAGEMENT (LIO) 
ORD PRICE:1,450pMARKET VALUE:£884m
TOUCH:1,445-1,450p12-MONTH HIGH:1,495pLOW: 678p
DIVIDEND YIELD:2.4%PE RATIO:77
NET ASSET VALUE:238p*NET CASH: £92m
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201953.19.3015.09.0
202075.86.879.2111.0
% change+43-26-39+22
Ex-div:03 Dec   
Payment:08 Jan   
*Includes intangible assets of £56m, or 92p per share.