Emerging Market equity - a 'look under the bonnet'

Wednesday, 16th August 2017 09:27 - by David Harbage

By contrast with UK banks, BGEO has a much cleaner, more understandable balance sheet. This FTSE350 index constituent is a pure play on the Georgian economy - which is performing strongly - as it is the dominant bank and also has subsidiaries in other business segments. It is worth reading today's report - or at least the CEO's piece to learn of the strong inherent growth (of the economy, local currency and BGEO itself) - by looking at LSE.co.uk's Live RNS or Share News pages.

Clearly the big risk is the geo-political one: Russia is 'on the doorstep'. But, in this observer's view, this is already 'in the price', the growth dynamics of Georgia are attractive and the shares' valuation is appealing (PE of 7.7 for 2018's forecast EPS, yield of 4.0% covered 3.3 times). Ten brokers cover the stock, (2 say buy & 8 are holders) and earnings forecasts have only gone in one direction over the past couple of years. A £1,314m market cap business, the shares have advanced from 1578p to £33 over the past 18 months.

That might suggest it's too late to invest - but profits have risen faster than the share price - and astute fund managers like Artemis, Franklin Templeton and Schroder appear to be adding, rather than lightening, their respective 4%+ stakes. Today's 4% fall looks like an opportunity to introduce something a bit different (think of it as emerging market equity) as part of a prudent strategy to diversify a portfolio.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.