Charles Stanley’s (CAY) turnaround is happening too slowly for management and investors. While the core profit margin improved to 9.3 per cent from 8.4 per cent during the first half, that is still far behind a medium-term target of 15 per cent. Chief financial officer Ben Money-Coutts blames higher compliance spending and a slower asset gathering rate than anticipated when that target was set in 2015.
By investing in sales and distribution, management hopes to grow higher-margin discretionary funds, which were up 7.3 per cent to £13.2bn during the first half. That bumped up the group blended revenue margin from 62 to 63 basis points, but the rise in funds for the core investment management division were due to market returns rather than new business, with net outflows of £0.1bn. What’s more, a 5 per cent increase in funds under management and administration to £25bn was also behind a rise in the MSCI WMA Private Investor Balanced Index of 5.5 per cent over the period. There was progress at execution-only service Charles Stanley Direct, which turned a £0.2m pre-tax profit from a £0.7m loss last year.
Analysts at broker Peel Hunt expect adjusted pre-tax profit of £12.2m for the year to March 2019, giving EPS of 18.5p (up from £10.9m and 15.9p 2018).
| CHARLES STANLEY (CAY) | ||||
| ORD PRICE: | 300p | MARKET VALUE: | £152m | |
| TOUCH: | 266-290p | 12-MONTH HIGH: | 410p | LOW: 266p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 202p | NET DEBT: | £69.3m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 74.6 | 6.9 | 10.9 | 2.50 |
| 2018 | 77.7 | 5.1 | 8.3 | 2.75 |
| % change | +4 | -26 | -24 | +10 |
| Ex-div: | 13 Dec | |||
| Payment: | 18 Jan |
