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Hargreaves Lansdown inflows drop

Despite an increase in market share, the fund supermarket saw net new business dip 9 per cent in the six months to December
January 31, 2020

Is Hargreaves Lansdown’s (HL.) gravity-defying rate of asset growth finally starting to slow? Half-year results for the fund supermarket, and the market reaction that greeted them, suggests it might be.

IC TIP: Hold at 1,756p

At the end of 2019, total assets under administration stood at £105.2bn, up by a seemingly impressive 22 per cent in the calendar year. But the 12-month comparison is flattering. On a half-year view, those assets rose by just 6 per cent, while net new business of £2.31bn in the six months to December was down 9 per cent on the prior year period.

The reason? “The external market was challenging in the second half of 2019,” argues chief executive Chris Hill, who reckons political uncertainty, the UK’s general election, Brexit and world trade tariffs each contributed to depress retail investment flows. The suspension of Neil Woodford’s funds – which Hargreaves promoted prior to their gating –  also “contributed to the general unease”.

General then, but apparently not specific. New client numbers and overall retention levels were consistent with prior periods, providing further evidence that the reputational hit from the Woodford debacle has been contained. A rise in Hargreaves’ share of the UK platform market, to 41.8 per cent by the end of September, is another positive, if somewhat backward-looking.

Analysts at Numis expect earnings per share of 63.3p for the current year to June 2020, narrowing to 60.6p in FY2021.

Hargreaves Lansdown (HL.)   
ORD PRICE:1,756pMARKET VALUE:£8.34bn  
TOUCH:1,731-1,808p12-MONTH HIGH:2,437pLOW:1,615p
DIVIDEND YIELD:2%PE RATIO:35  
NET ASSET VALUE:93.1pNET CASH:£318m  
Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201823615326.110.3
201925817129.311.2
% change+9+11+12+9
Ex Div:13 Feb   
Payment:9 Mar