Shares in emerging markets-focused asset manager Ashmore (ASHM) rose to an all-time high this week, after half-year numbers beat City targets. Although the market had already been briefed on asset flows, half-year earnings smashed consensus analyst expectations by 16 per cent, thanks to a below-forecast tax rate, above-forecast seed capital gains, and foreign exchange gains that weren’t forecast at all.
A pledge by China to cut tariffs on US goods probably helped investor sentiment, too. But while footnotes and headlines matter, Ashmore is best understood as a big-picture story. In that regard, trading in the six months to December 2019 provided further support to the group’s view that global capital flows to “developing” markets can only strengthen.
Net client inflows hit $5.7bn (£4.4bn) in the period, as clients pushed money into Ashmore’s local currency, overlay-liquidity and blended debt mandates. Although corporate debt funds saw net outflows of $0.5bn and a $0.3bn negative performance, this was compensated by a surge in flows to equities.
That has prompted Ashmore’s investment team to “add risk at attractive price levels”, which helps to explain management confidence that recent asset underperformance will reverse, as well as the first dividend hike since 2014.
Numis, which believes the shares are over-valued, forecasts earnings of 29.5p per share for the year to June 2020, and 32.2p in FY2021.
| ASHMORE (ASHM) | ||||
| ORD PRICE: | 574p | MARKET VALUE: | £ 4.09bn | |
| TOUCH: | 573-574p | 12-MONTH HIGH: | 574p | LOW: 382p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 114p | NET CASH: | £427m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 152 | 93.0 | 10.8 | 4.55 |
| 2019 | 183 | 132 | 16.9 | 4.80 |
| % change | +21 | +42 | +57 | +5 |
| Ex-div: | 5 Mar | |||
| Payment: | 30 Mar |
