Research, Charts & Company Announcements
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JULIUS BAER GROUP LTD
JULIUS BAER GROUP LTD
Expected strong profit increase
25 Jul 16
The reported net profit jumped from CHF40m for H1 15 to CHF362m for H1 16. Interest and dividend income rose by 33% to CHF510m in H1 16. Net commission and fee income declined by 14% to CHF739m for H1 16 compared to H1 15. Trading income was down by 46% to CHF118m in the same period. Operating income increased slightly by 1% to CHF1.42bn for H1 16 compared to H1 15. Personnel expenses were flat at CHF632m for H1 16. General expenses declined by 53% to CHF288m in H1 16 compared to H1 15 which was burdened by US tax evasion provisions of CHF326m. Operating expenses were down by 27% to CHF985m for H1 16. Pre-tax profit increased from CHF54m for H1 15 to CHF440m for H1 16. Assets under management (AuM) rose by 4% to CHF311bn compared to year-end 2015. Net new money inflows were CHF5.5bn (+3.7% annualised) in H1 16. The Basel 3 CET1 ratio stood at 15.9% and 14.8% on a Basel 3 (2019) fully applied basis as at 30 June 2016.
FY15 net profit burdened by litigation provisions but increased targets and dividend
01 Feb 16
Reported net profit was down by 67% to CHF121m for 2015 compared to 2014. However, underlying net profit increased (which excludes a CHF521m US litigation provision) by 20% to CHF701m for 2015 compared to 2014 according to Julius Baer. Interest and dividend income rose by 9% to CHF847m in 2015. Net commission and fee income was flat at CHF1.52bn for 2015. Trading income was up by 33% to CHF436m in the same period. Operating income rose by 6% to CHF2.7bn for 2015 compared to 2014. Personnel expenses were down by 2% to CHF1.24bn for 2015 compared to 2014. General expenses jumped by 81% to CHF1.1bn in 2015 mainly due to the US tax evasion provisions of CHF521m. Operating expenses were up by 23% to CHF2.56bn for 2015. Assets under management (AuM) increased by 3% to CHF300bn compared to year-end 2014. Net new money inflows were CHF12bn (+4.2%) in 2015. The Basel 3 CET1 ratio (phase in) stood at 18.3% at the end of 2015. The dividend proposal increased from CHF1.00 for FY2014 to CHF1.10 per share for FY2015. Julius Baer also upgraded its cost/income ratio target from 65%-70% to 64%-68% (67% for FY2015). It downgraded its BIS CET 1 target ratio from 15% to 11%. Julius Baer also intends to grow the ordinary dividend pay-out ratio to 40% of adjusted net profit. The bank will release the 2015 annual report on 21 March.
No loss for H1 15 despite US tax evasion provision
20 Jul 15
The reported net profit was down by 78% to CHF40m for H1 15 compared to H1 14. However, underlying net profit increased (which excludes a CHF326m US litigation provision) by 34% to CHF384m for H1 15 compared to the same period last year according to Julius Baer. Interest and dividend income rose by 11% to CHF384m in H1 15. Net commission and fee income increased by 6% to CHF792m for H1 15. Trading income was up by 89% to CHF217m in the same period. Operating income rose by 14% to CHF1.41bn for H1 15 compared to H1 14. Personnel expenses were flat at CHF631m for H1 15 compared to H1 14. General expenses jumped by 126% to CHF613m in H1 15 mainly due to the US tax evasion provisions. Operating expenses were up by 36% to CHF1.35bn for H1 15. Assets under management (AuM) decreased by 2% to CHF284bn compared to year-end 2014. Net new money inflows were CHF6.5bn (+6% annualised) in H1 15. The Basel 3 CET1 ratio stood at 19.1% and 13.4% on a Basel 3 (2019) fully applied basis as at 30 June 2015. Today, Julius Baer has announced it has agreed to acquire a 40% participation in a leading independent financial advisory firm in Mexico, NSC Asesores, for an undisclosed amount. The transaction would mark the entry into the second largest wealth management market in Latin America regarding Julius Baer.
$350m litigation provision in H1 15
24 Jun 15
Julius Baer announced it is to make a preliminary provision of $350m for its eventual settlement with the US Department of Justice (DOJ) regarding its US tax evasion case. The litigation provision will be charged to the 2015 half-year results. The bank said, if the amount had been provisioned at the end of April 2015, the group’s BIS total capital ratio would have been 20.9% and its BIS tier 1 capital ratio 19.6%.
Positive returns from all asset classes in Q316
28 Nov 16
Tetragon Financial Group (TFG) reported fair value earnings of US$49.7m for the third quarter of 2016, with positive contributions made by all asset classes. NAV total return was 1.3% for the quarter and 7.8% for the nine months to 30 September 2016. Having completed a US$100m tender offer in June 2016, TFG commenced a US$50m tender offer on 9 November 2016, which should be meaningfully accretive to NAV per share given the current wide share price discount to NAV. Consistent with previous years, the third interim dividend was held in line with the second interim, confirming TFG’s 5.9% yield.
N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.
Small Cap Breakfast
28 Nov 16
Warpaint London—Schedule one update. Raising £2.5m at 97p. Expected mkt cap £62.6m vs revenues of £22.3m Walls & Futures REIT — Has raised £1m at £1 to acquire, refurbish or develop residential properties in the UK . Due to arrive on ISDX on 29 November Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
Long-term investment in Asian small caps
10 Nov 16
Scottish Oriental Smaller Companies Trust (SST) aims to generate long-term capital growth by investing in a portfolio of small-cap Asia ex-Japan equities. Vinay Agarwal is the interim lead fund manager while Wee-Li Hee is on maternity leave; he is assisted by Martin Lau, Scott McNab and the broader First State Stewart Asia team. Stocks are selected on a bottom-up basis, with a view to preserving capital on the downside as well as achieving capital growth. SST has significantly outperformed the peers and the MSCI AC Asia ex-Japan and MSCI AC Asia ex-Japan Small Cap indices over both five and 10 years.
17 Nov 16
Topic of the quarter: Following on from our last quarterly we have delved further into the potential and challenges that the Internet of Things present the sector. Having spoken to a wide variety of companies from the sector (large and small, UK and overseas) it is apparent that there is going to be a very significant increase in the amount of data either generated by or available to Support Service companies. The key to generating value from this change will be breaking down the silos in which data is currently held, attracting and investing in the right skills and talent, seeing beyond the short-term investment that is likely to be needed and engaging with clients on a higher, more strategic level. If the sector doesn’t react, then the door is wide open for the Technology sector.
25 Nov 16
Sound Energy (SOU): Completion of fundraise (BUY) Following yesterday’s announcement relating to the fundraise on the Primarybid platform the company has successfully completed the transaction. Analyst: Dougie Youngson Ithaca Energy (IAE): Inspection delay (BUY) During the final stages of commissioning faults were identified in some junction boxes. Consequently start up of production has been delayed until early January whilst the situation is remedied. Analyst: Dougie Youngson Zambeef* (ZAM): Good performance in a challenging year (CORP) Zambeef has reported FY2016 results which we feel are commendable given an extremely difficult twelve months which saw the collapse of the Kwacha, high local inflation, drought, power cuts and the requirement for a large-scale refinancing of the business. In this context double-digit underlying progress in revenue and gross profit is a significant achievement. FY2017 should be a far more 'normal' year and we are not materially changing our FY2017 forecasts or target price. Analyst: Raymond Greaves Gresham House Strategic* (GHS): Attractively priced (CORP) On a 26% discount to NAV of 1,025p yet targeting a 15% annualised return and having made a clear statement on dividend distribution (distributing 50% of net realised profit as a dividend, with 15p indicated from net realised profit YTD for a 2% yield), GHS shares present an attractive investment opportunity. The management objective remains the construction of a concentrated portfolio of mainly quoted smaller companies acquired on compelling multiples, with a three- to five-year holding period and significant engagement envisaged to maximise returns. Analyst: Duncan Hall