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UBS has cut its recommendation for asset manager Schroders from 'neutral' to 'sell', saying that expectations are too high. "We downgrade Schroders to 'sell' as we believe that expectations on flows and on capital returns have led the stock to re-rate vs peers while we remain cautious on both points," the broker said.
Schroders: JPMorgan Cazenove ups target from 1,650p to 1,684p, overweight rating kept.
Positive Points: In spite of investor uncertainty, Schroders saw £1.9 billion of net inflows to its intermediary business in the first half of 2012, and reported that two thirds of its funds outperformed their benchmarks. The blue-chip asset manager continues to enjoy diversification in both product and client type, along with its geographical footprint. The group had previously noted that two thirds of group revenues arose from clients outside of the UK. In May, Schroders announced that in conjunction with Axis, it wanted to build a significant asset management player in the Indian market, with the intention of being able to distribute Axis funds internationally. The Board has declared an unchanged interim dividend of 13 pence per share.
Negative Points: "Investor demand across our business will be affected by the high level of macro economic and market uncertainty which we expect to persist for the remainder of the year," the company said. Net revenues in Private Banking were down nearly 10% at £52.6 million and profits fell to £10.4 million from £12.3 million, an indication that clients became more defensive. At the heart of any asset manager is the investment team. As with any fund management business, there is a risk that if a "star" manager leaves, investors and assets under management may follow. Schroders has significant exposure to UK, European and Asian equity markets. Increased competitive pressures could dampen revenue margins. The Financial Services Authority's Retail Distribution Review (RDR) continues to provide a degree of uncertainty.
Financial Highlights: Pre-tax profits for the six months to 30 June were £177.4 million, down 17% from £215.7 million in the first half of 2011. First half net inflows of £ 2.7 billion were well above forecasts, buoyed by a £1.9 billion inflow of cash into its institutional asset management business. Total assets under management stood at £194.6 billion, which compared with £199.6 billion at the end of March.
Half year results: The fund manager has recorded a 3.9% increase in assets under management (AUM), but pre-tax profits revealed a 17% fall when compared with the first six months of 2011. The company said retail investor demand had been hit by a "very uncertain" outlook both for economies and markets, in Europe in particular but also in Asia. "Investor demand across our business will be affected by the high level of macro economic and market uncertainty which we expect to persist for the remainder of the year. In this challenging environment our broad product range and global client base is resulting in a resilient performance," the group's statement said. We believe that the current market consensus opinion of a weak hold will remain in place for the time being.
Company overview The Group's core activity is that of fund management services. The group manages over £180 billion for a variety of institutional and retail clients. In addition, the group provides private banking facilities to high net worth clients.
Private Banking Net revenues in Private Banking were down nearly 10 per cent. at £52.6 million (H1 2011: £58.0 million) reflecting a reduction in assets under management compared to levels a year ago but, more importantly, a decline in net revenue margins as clients moved towards more defensive strategies and transaction volumes fell. This also affected new business flows and net outflows in the first half were £0.2 billion. Costs were down 8 per cent. after £1.8 million of additional provisions against previously impaired commercial property loans, and profit before tax was £10.4 million (H1 2011: £12.3 million). Assets under management in Private Banking at the end of June were £16.0 billion (31 December 2011: £16.0 billion). Group The Group segment comprises central costs and returns on investment capital, including seed capital in new products. Against a difficult investment environment, particularly in the second quarter, returns on our investment capital portfolio in the first half totalled £13.8 million (H1 2011: £8.1 million), of which £7.3 million (H1 2011: £1.7 million) was recognised in reserves. Excluding the profit in reserves, the result for the Group segment was a loss before tax of £8.2 million (H1 2011 profit: £0.3 million). In 2011, there was a non-recurring pension credit of £12.1 million in the first half. Dividend The Board has declared an unchanged interim dividend of 13.0 pence per share (interim dividend 2011: 13.0 pence) payable on 27 September 2012 to shareholders on the register at 17 August 2012.
Asset Management Asset Management net revenue was £491.0 million (H1 2011: £534.6 million) including performance fees of £10.1 million (H1 2011: £13.8 million). Net revenue margins, excluding performance fees, were 54 basis points (2011: 56 basis points) as a result of continued progress in winning new business in Institutional and in Multi-asset rather than any underlying pressure on fees. Profit before tax was £175.2 million (H1 2011: £203.1 million). Investment performance continues to be competitive with 66 per cent. of assets under management outperforming their benchmark or peer group over three years. Net inflows in Institutional were £1.9 billion across Multi-asset, Equities and Alternatives, partially offset by net outflows in Fixed Income. Regionally, these new business wins were broadly spread across continental Europe, Asia and the Americas. We also have a good pipeline of new business we have won but which has not yet been funded, although we are seeing institutional clients delay funding decisions as a result of the volatile market environment. Assets under management in Institutional at the end of June were £113.3 billion (31 December 2011: £108.4 billion). Unsurprisingly, retail investor demand continued to be affected by the very uncertain economic and market outlook. This was particularly true in continental Europe and to a lesser extent in Asia Pacific. We nevertheless generated net inflows in Intermediary of £1.0 billion with a strong performance in our US Intermediary business. Assets under management in Intermediary at the end of June were £65.3 billion (31 December 2011: £62.9 billion).
Outlook Investor demand across our business will be affected by the high level of macro economic and market uncertainty which we expect to persist for the remainder of the year. In this challenging environment our broad product range and global client base is resulting in a resilient performance.
Management report Financial markets remained volatile in the first half of 2012 with most of the gains made earlier in the year given back in the second quarter as concerns increased over the stability of the Eurozone and faltering economic growth. Consequently, there were no clear trends in investor sentiment beyond a natural reluctance amongst institutional, retail and high net worth clients to commit to long term investment strategies in the face of so much macro economic uncertainty. In this challenging environment we were able to generate net new business of £2.7 billion in the first half of 2012 because of the diversification of our business across a broad range of asset classes, client segments and geographies. These new business wins, together with modest but positive investment returns for clients overall, took assets under management at the end of June to £194.6 billion (31 December 2011: £187.3 billion). Profit before tax in the first half of the year, reflecting the lower level of markets and assets under management compared to a year earlier, was £177.4 million (H1 2011: £215.7 million). Shareholders' equity at the end of June was £1.9 billion (31 December 2011: £1.9 billion). We are taking advantage of our financial strength to invest in the business across a number of areas. In the first quarter we announced the purchase of a 25 per cent. stake in Axis Asset Management in India. We are engaged in a major information technology upgrade in support of our investment teams and we are taking advantage of the dislocation in markets to add to our pool of talent. While these investments add to our cost base, we believe they will position the firm well for the long term.
Half-year results to 30 June 2012 (unaudited) · Profit before tax £177.4 million (H1 2011: £215.7 million) · Earnings per share 50.7 pence per share (H1 2011: 60.7 pence per share) · Interim dividend 13.0 pence per share (interim dividend 2011: 13.0 pence per share) · Net inflows £2.7 billion · Assets under management £194.6 billion (31 December 2011: £187.3 billion)
http://www.investegate.co.uk/Article.aspx?id=201208020700161146J
Executive Director, Philip Mallinckrodt, spends £149,572.00 on buying 12,200 of Schroders shares @ 1,226.00p on the 21st May 2012. Source: http://sharedealing.nandp.co.uk/director-deals/SDR/Schroders P.S. Here's a couple of links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?threadid=252803 http://www.euroinvestor.com/community/discussionthread.aspx?threadid=253089
"Longer term, in addition to distributing Axis AMC's funds internationally, there will be an opportunity to distribute Schroders funds in India through Axis' distribution network," Dobson said.
The transaction is subject to regulatory approval and is expected to complete during 2012. Michael Dobson, Chief Executive of Schroders said the acquisition enabled it to participate in the growth opportunity represented by the Indian unit trust market through a strategic relationship with a leading private sector bank.
Asset manager Schroders is to take a substantial stake in the Indian asset management business of Axis Bank. Schroders is acquiring 25% of Axis Asset Management Company (Axis AMC), a company which has assets of around $2.3bn under management.
Positive Points: •The blue-chip asset manager continues to enjoy diversification in both product and client type, along with its geographical footprint. The group had previously noted that two thirds of group revenues arose from clients outside of the UK. •The firm saw an injection of institutional money keep its net inflows for 2011 in positive territory. •Within private banking, the investment manager saw profit more than double to £23.8 million (2010 - £10.1 million). •A progressive dividend continues to be pursued A full year dividend of 39 pence per share has been recommended (2010 – 37p).
Negative Points: •At the heart of any asset manager is the investment team. As with any fund management business, there is a risk that if a "star" manager leaves, investors and assets under management may follow. •Schroders has significant exposure to UK, European and Asian equity markets. •Increased competitive pressures could dampen revenue margins. •The Financial Services Authority's, Retail Distribution Review (RDR) continues to provide a degree of uncertainty.
Schroders delivered a pre-tax profit of £407.3 million in 2011 (£406.9 million profit in 2010), against a challenging backdrop and exceeding City expectations. In full year results announced today, Schroders received £3.2 billion of inflows in the 12 months to 31 December2011, compared to a net inflow of £27.0 billion in 2010. While overall 2011 sales, including institutional funds were positive, the group’s retail product range suffered a £3.8 billion retail outflow in 2011 compared to a £7.9 billion inflow in 2010. Tough market conditions put downward pressure on assets and the firm ended the year with £187.3 billion under management, down from £196.7 billion a year earlier. "Concerns over the level of government debt in developed economies, the impact of deleveraging on economic growth and the instability of the Eurozone weighed heavily on equity markets throughout 2011," said a statement from the group. Accompanying management outlook comments remained cautious, highlighting that financial markets in 2012 are likely to remain volatile and economic growth subdued.
The Group's core activity is that of fund management services. The group manages over £180 billion for a variety of institutional and retail clients. In addition, the group provides private banking facilities to high net worth clients
Hmm need to check that last info
Robin Buchanan, an independent non-executive director of Schroders, the FTSE 100 asset management firm, has bought 205 non-voting ordinary shares in the firm for 1,212p each. The move takes his total to 2,368 non-voting shares. Buchanan, 59, joined the board in March 2010, and is a member of the firm's Audit and Risk Committee.
Schroders (SDR) retained its "buy" rating from Singer Capital, but with a reduced target price of 1,450p, from 1,550p. The broker sees tough times ahead for the fund manager, forecasting net outflows of 4.3 billion pounds from intermediary funds due to its exposure to the eurozone. With the company maintaining a no cut dividend policy, the broker believes that it is focused on long term development and believes the firm may find opportunities for expansion in 2012. Shares in Schroders dropped 39p to 1,256p.
Schroders: ubs downgrades from buy to neutral, target cut from 1,800p to 1,430p.