Stocks’ Details
 

Janus Henderson Group Plc

Investment Performance Outperformed Benchmark: Janus Henderson Group Plc (ASX: JHG) is a global investment management company with a market capitalisation of $4.38 Bn as on 2^nd April 2020. During 2019, the company’s investment performance has strengthened with 76% and 77% of its Assets Under Management (AUM), outperforming benchmarks on a three- and five-year basis, respectively. Its AUM witnessed a YoY growth of 14% to $374.8 billion, which was driven by the positive market in 2019. For FY19, the company distributed US$272 million in the form of a dividend.


Key Metrics (Source: Company Reports)

Strong Investment Performance Will Underpin Future Growth: Investment performance of the company is strong, which demonstrates that it would deliver growth in future. The financial foundation is robust, which is allowing investment in the business while returning excess cash to shareholders.

Stock Recommendation:The company announced a quarterly dividend (Q4 FY19) amounting to US$0.36 per share, which was paid on 5^th March 2020. Current ratio of the company stood at 3.35x in FY19 as compared to the industry median of 1.69x. This reflects that the company is in a decent position to address its short-term obligation against the broader industry. Debt to equity of JHG stood at 0.07x in FY19 versus 0.50x of the industry median. Therefore, considering the strong liquidity position and deleveraged balance sheet, we give a “Buy” recommendation on the stock at the current market price of $23.500 per share, down by 5.051% on 2^nd April 2020.

Credit Corp Group Limited

Decent Growth in Bottom-line: Credit Corp Group Limited (ASX: CCP) operates into debt collection and consumer lending industry of Australia. The market capitalisation of the company stood at $787.53 Mn as on 2^nd April 2020. During 1H FY20, the company reported a rise of 15% in its bottom line (NPAT) to $38.6 million along with the growth of 13% to $230 million in the consumer loan book. Moreover, its Australian/New Zealand debt buying segment has generated record collections and NPAT during 1H FY20.


Financial Metrics (Source: Company Reports)

Suspension of Guidance: Due to the rising torture of COVID-19 pandemic, the company has withdrawn its earnings and investment guidance for 2020. However, the company has not experienced any material impacts arising from COVID-19.

Valuation Methodology: P/E Multiple Based Relative Valuation

P/E Based Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company is in a strong balance sheet with the availability of $170 million of cash and undrawn credit lines under facility agreements which will mature in 2022 and 2023. We have valued the stock using P/E based relative valuation method, and for the purpose, we have taken peers such as Pendal Group Ltd (ASX: PDL), Smartgroup Corporation Ltd (ASX: SIQ) and  HUB24 Ltd (ASX: HUB) and arrived at a target price, which is offering an upside of lower double-digit (in percentage terms).

Hence, in light of strong balance sheet and funding position, decent performance in 1HFY20 and valuation, we give a “Buy” recommendation on the stock at the current market price of $13.450 per share, down by 6.206% on 2^nd April 2020.

Pendal Group Limited

Higher Markets and Investments Supported AUM: Pendal Group Limited (ASX: PDL) is a global asset management company with a market capitalisation of $1.56 Bn as on 2^nd April 2020. PDL recently announced that it has become a substantial holder in Beacon Lighting Group Limited on 30^th March 2020 with the voting power of 5.49%. The lower performance fees during FY19 has resulted in a decline of 19% in Cash NPAT, which amounted to $163.5 million. It closed the financial year 2019 with AUM of $100.4 billion, which was underpinned by higher markets and investment performance, favourable foreign currency movements on foreign denominated FUM, which was offset by net outflows of $4.7 billion.

For the same period, PDL declared final dividend amounting to 25.0 cps, taking the full-year dividend to 45.0 cps. The below picture gives an idea of key dates for 2020:


Key Dates 2020 (Source: Company Reports)

Focused for Growth and Diversification: PDL is consistently focused on investment for growth and diversification. It is also focused to attract and retain investment talent, which creates a portfolio of complementary strategies. The company is also planning to make investment in technology for increasing efficiency and enhancing client service.

Valuation Methodology: P/E Multiple Based Relative Valuation

P/E Based Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: Net margin of the company stood at 30.0% in FY19 as compared to the industry median of 19.7%. This reflects that the company has decent capabilities to convert its topline into the bottom line as compared to the broader industry. We have valued the stock using P/E based relative valuation method, and for the purpose, we have taken peers such as Magellan Financial Group Ltd (ASX: MFG), Platinum Asset Management Ltd (ASX: PTM), Navigator Global Investments Ltd (ASX: NGI), etc., and arrived at a target price, which is offering an upside of lower double-digit (in percentage terms). Thus, considering capabilities to convert its topline into the bottom line and decent outlook, we maintain a “Hold” rating on the stock at the current market price of $4.650 per share, down by 3.926% on 2^nd April 2020.

AUB Group Limited

Organic Growth Supported Business Performance: AUB Group Limited (ASX: AUB) is in the business of insurance broking, underwriting agency and risk management. The market capitalisation of the company stood at $723.42 Mn as on 2^nd April 2020. For 1H FY20, the company delivered a growth of 25.3% in adjusted NPAT, which amounted to $21.3 million. Its adjusted earnings per share stood at 28.96 cents with a rise of 12.0%. These results were supported by organic growth during the half-year.

In another update, the company announced that Wellington Management Group LLP and its related bodies corporate has made a change to their substantial holdings in the company on 16^th March 2020. The current voting power remains at 6.12% as compared to the previous voting power of 5.06%.


First-Half Performance (Source: Company Reports)

Withdrawn Earnings Guidance: As a result of increasing uncertainty from COVID-19, the company has suspended its earnings guidance for FY20. Moreover, it has increased its dividend payment to 3^rd September 2020.

Valuation Methodology: P/E Multiple Based Relative Valuation

P/E Based Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: During 1H FY20, the strong growth in Health and Rehabilitation supported the performance in Broking and Agencies business of the company. As per ASX, the stock of AUB Group Limited is trading towards 52-week lower levels, which could be undertaken as decent levels to make entry. We have valued the stock using P/E based relative valuation method, and for the purpose, we have taken peers such as Steadfast Group Ltd (ASX: SDF), PSC Insurance Group Ltd (ASX: PSI), and AMP Ltd (ASX: AMP), and  arrived at a target price, which is offering an upside of lower double-digit (in percentage terms). Hence, considering the strong performance in 1H FY20, valuation and current trading levels, we give a “Buy” recommendation on the stock at the current market price of $9.400 per share, down by 4.082% on 2^nd April 2020. 
 
 
Comparative Price Chart (Source: Thomson Reuters)

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