An upward movement in the share price on results day should tell you the market was pleasantly surprised by half-year figures from investment manager Ashmore (ASHM). True, the shares have found renewed momentum thanks to a widespread recovery in global emerging markets (EMs), but higher than expected performance fees and lower costs helped give the shares an extra boost. On a cash profit basis – which excludes seed capital and any movement in foreign exchange rates – a result of £91.2m beat consensus expectations of £82.7m, reflecting a £5m outperformance from fees and a £2m reduction in overheads.
Chief executive Mark Coombs admits the group is operating in a “favourable environment”. Net inflows of $7.9bn (£6.9bn) and a positive market performance drove an 18 per cent rise in assets under management, with demand evident across a range of fixed income, equity and overlay products as investors corrected their underweight positions in EMs. Management expects this shift to continue, even in light of recent market volatility.
“A number of these recent financial crises have emanated from the developed world,” says finance director Tom Shippey. “Something investors are catching on to.” That may well be the case, but there is such a thing as contagion; lest we forget, EMs have been able to outstrip their western counterparts precisely because of an increasingly meshed global economy.
Against a strengthening macro backdrop, valuations for both EM equities and bonds may not be as compelling as a year ago, but they remain attractive compared with their historic valuations and with most developed markets. Metrics remain eye-catching for Brazil, India and Russia, although there are obvious geo-political issues associated with the last of that trio, so an average price/earnings (PE) ratio of 8.2 and a yield of 4.8 for the Russian RTS index needs to be seen in that light.
Analysts at Peel Hunt expect pre-tax profits of £175m for the year ending June 2018, giving EPS of 19.1p, from £210m and 23.7p in FY2017.
| ASHMORE (ASHM) | ||||
| ORD PRICE: | 423.2p | MARKET VALUE: | £3.02bn | |
| TOUCH: | 423.2-423.4p | 12-MONTH HIGH: | 447p | LOW: 318p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 99p | NET CASH: | £369m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 141 | 122 | 14.7 | 4.55 |
| 2017 | 140 | 99.0 | 12.0 | 4.55 |
| % change | -0 | -19 | -19 | - |
| Ex-div: | 8 Mar | |||
| Payment: | 4 Apr | |||
