Stellar flow performance, remains in pursuit of growth

Tatton generated exceptional H2 flows: attracting £1.4bn net inflows in H2 equating to £232m avg pcm; well ahead of the already impressive £152m pcm in H1. AuM/I totalled £17.6bn sprinting past the £15bn 3yr strategic target and well ahead of our forecast. Much of the outperformance came late in the year with limited impact on FY24e (unch), with only modest changes to outer years (+3-5%) on continued investment to drive medium-term growth; maintaining the 50%+ operating margin. We reiterate BUY

Tatton Asset Management (TAM LN) - Record net inflows

Tatton, the leading on-platform discretionary fund manager (DFM) and IFA support services Group has released a trading update ahead of its results to 31 March 2024, due on 18 June 2024.

Interims in line, strong net flows sustained

H1 earnings are in line with our forecasts; 50% of our FY24e are now covered. This reflects a sustained flow performance year to date, primed to continue into H2. The opportunity in MPS is compelling with a “doubling” in AuM not out of the question; both from adoption in existing relationships and wider segment growth. The board has re-phased the dividend from 33:66 to 50:50 given plentiful cash, driving a 78% increase in the interim dividend. There is no change to the overall dividend forecast,

Tatton Asset Management (TAM LN) - Outstanding interims

Interims delivered on expectations set by its October update, which revealed Group AuM of £14.8 billion and “continued growth in both revenue and profits driven by strong net inflows”.

Sector-leading net flows, double-digit profit growth

AUM grew 8% over H1-24 (to 30 Sep 23) from £12.7bn to £13.7bn. Net inflows totalled +£910m (7% of opening AUM), an inflow rate far above most peers, with some experiencing substantial outflows (see page 2). Investment performance contributed +£100m to AUM. Encouragingly, Tatton reports that the level of net inflows of H1 has continued into H2. Revenue was up 10% y-o-y from £15.9m in H1-23 to £17.5m; adjusted operating profit (AOP) increased 11% from £8.0m to £8.9m; and AOP margin hit 50.7%, fro

Growth rate head-and-shoulders above peers (again)

AUM grew 8% over H1-24 (to 30 Sep 23) from £12.7bn to £13.7bn. Net inflows totalled £910m (7% of opening AUM), showing remarkable strength and consistency (H1-23: £907m, H2-23: £887m). This is even more impressive given the difficult economic and market environment which has hurt the growth of most sector peers, with some experiencing substantial outflows. Market and investment performance contributed £100m to AUM over the half-year. ‘Assets under influence’ (AUI), which includes the AUM of 8AM

Flow momentum continues in challenging conditions

Tatton grew AuM by 8% in H1 to £13.7bn with £910m net inflows (£152m pcm). This organic flow performance is exceptionally resilient in absolute terms. With an unwavering focus on client outcomes and market leading pricing, we think Consumer Duty is a positive for Tatton. We leave forecasts unchanged. With a considerable organic opportunity (existing clients, market share growth, market growth) and a 50%+ EBITDA margin, we reiterate our BUY and 735p TP (30x cal’23e PER).

Tatton Asset Management (TAM LN) - Profits driven by net inflows

Ahead of its interims on 16 November, Tatton’s six month trading update reveals “continued growth in both revenue and profits driven by strong net inflows”.

Forecasts exceeded in FY23, strong start to FY24

In FY23, Tatton (once again) grew much faster than peers. AUM was up 12% y-o-y excluding acquisitions (peer group median: 0%) to £12.7bn on 31 Mar 23 (31 Mar 22: £11.3bn). Assets Under Influence (AUI) reached £13.8bn (including 8AM Global: 50% stake acquired in Aug 22). In just over two months post year-end, AUI has grown another 3% to £14.3bn. The bulk of growth in FY23 came from exceptionally strong net flows of +£1.8bn (FY22: +£1.3bn); 16% of opening AUM (FY22: 14%) compared to a peer group

Finals in line, flow momentum continues

Tatton’s FY23 results are in line with our estimates. £1.8bn net inflows (£150m pcm) delivered organic growth, despite market headwinds, with continued demand and product evolution. Flows have been sustained with £350m net inflows (£152m pcm) in the first weeks of FY24e. We revise our flow assumption up, although leave forecasts unchanged; tempering views on Paradigm (Mortgages). Tatton continues to deliver strong organic growth in a space with strong structural growth, generating an exceptional

Tatton Asset Management (TAM LN) - TAM 2023 results

Full year results prompt us to raise our forecasts for years to March 2024 and 2025: we increase our revenue expectations by 2.6% and 6.9% to £35.3m and £39.6m; after investment in its distribution, we increase our adj EPS expectations by 4.0% and 8.2%, and our DPS forecast by 3.4% and 6.4% to 15.0p and 16.5p.

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

Bluefield Solar Income Fund – Fundamentals shine despite discount

The manger comments that, in common with the other trusts in the renewable energy sector, the last six months have continued what has been a challenging period for the Bluefield Solar Income Fund (BSIF). It adds that the trust’s ongoing fundamental performance has failed to reverse a steady slide in its share price which began back in May 2023. Despite this, it says the company has continued to deliver solid NAV growth and market-leading shareholder distributions thanks to a range of contractual

LSL Property Services (LSL LN) - Transformation & market recovery

2023 results are, as indicated in its February pre-close update, “slightly ahead of market expectations”. Current trading continues to improve, with 1Q24 underlying operating profit up yoy, “reflecting the benefits of the Group’s transformation programme completed in 2023 as well as improving market conditions.” With net cash of £35m at end 2023, the Board approved 7.4p final DPS and £7m buy back.

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

LIBERUM: PensionBee: Strong start to the new financial year

International Public Partnerships - Consistently and responsibly delivering

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LIBERUM: NewRiver: Q4 trading update: Continued operational momentum

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Witan

Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…

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