Janus Henderson Group Plc

JHG Details

Highlights of Q1FY21 (March Quarter): Janus Henderson Group Limited (ASX: JHG) is one of the global asset management firms providing a range of investment solutions to help achieve investors their long-term goals. The

• Increase in adjusted Diluted EPS: JHG reported the adjusted diluted EPS of US$0.91, up by 52% YoY.
• Rise in adjusted operating income: JHG recorded adjusted operating income of US$201.5 million in Q1FY21 after acquisition and deal-related costs versus US$164.5 million in Q1FY20.
• Higher Dividend for Q1FY21: The company declared a dividend of US$0.38 per share, up by 6% QoQ. JHG had set 11 May 2021 as the record date and 27 May 2021 as the dividend payment date.
• Buy-Back of shares: JHG re-purchased 8.048 million of its common stock from Dai-ichi Life for US$230.2 million to participate in the latter’s secondary public offering on 9 February 2021.
• Increase in Assets Under Management (AUM): JHG reported an AUM size of US$405.1 billion, up by 1% QoQ.

Assets Under Management Trend from FY18-FY20; (Analysis by Kalkine Group)

Key Risks:

1. The company faces a host of financial risks such as low-interest rates, lack of liquidity, and market risks on its investment portfolio.
2. As an investment management company, JHG is highly regulated by the various authorities and the fiscal and monetary policy of the Government.

Outlook:

• The company will continue to exercise financial control, while exploring strategic growth options and returning value to shareholders.
• JHG is optimistic to witness continued business momentum across equities, multi-asset, fixed income solutions, and its intermediary channel.
• Q2FY21 Results Declaration: JHG will declare the Q2FY21 results on 29 July 2021.
  

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of JHG gave a positive return of 44.96% in the past nine months and a positive return of 76.83% in the past year. The stock is currently trading near its 52-weeks’ high level of $55.430. We have valued the stock using the Enterprise Value to Sales-based illustrative relative valuation method and have arrived at a target price with correction of a high single-digit downside (in % terms). We believe that the company can trade at a slight premium than its peer median, considering the rise in net income on pcp, increase in quarterly cash dividend, and AUM for Q1FY21 versus Q4FY20. For this purpose, we have taken peers like Perpetual Limited (ASX: PPT), IOOF Holdings Limited (ASX: IOOF), Link Administration Holdings Limited (ASX: LNK), and others. Considering the current trading levels, decent increase in returns in the past nine months and past year, valuation, we suggest investors to brook profit and give a ‘Sell’ rating on the stock at the current market price of $55.085, as of 22 July 2021, 11: 06 AM (GMT+10), Sydney, Eastern Australia.

JHG Daily Technical Chart, Data Source: REFINITIV  

Austin Engineering Limited

ANG Details

Change in Shareholding: Austin Engineering Limited (ASX: ANG) is engaged in manufacturing, repairing, and maintaining products used in the mining and resources sector. On 21 July 2021, ANG announced that Perennial Value Management Limited (PVM) decreased its voting power from 14.98% to 13.10%.

Consolidation of Mackay Business:

• On 29 June 2021, ANG plans to consolidate two distinct businesses in Mackay, Queensland, to increase the sales and support services for the newly manufactured products regionally.
• ANG expects one-time restructuring costs of ~$0.6 million and goodwill impairment of $1.2 million in FY21 from the consolidation.
• ANG estimates ~$4 million capital to be released via the sale of assets from the workshop closure. As a result, the Len Shield workshop is estimated to generate ~$9.7 million of revenue and an EBITDA loss of $0.2 million in FY21.

1HFY21 Financial Results:

• Increase in Normalised EBITDA: The company reported EBITDA of $6.3 million, up by 32% YoY.
• Growth in Underlying NPAT: For 1HFY21, ANG posted an underlying NPAT from operations of $1.5 million versus $0.2 million in 1HFY20.  
• 90% Order Book Secured: ANG has already obtained 90% of the sales order book to meet the FY21 guidance.
• Strong APAC Performance: The company witnessed a robust performance in Asia-Pacific in 1HFY21 supported by a turnaround in the North American business orders in January and February 2021. 

Revenue & Net Income Trend from FY16-FY20; (Analysis by Kalkine Group)

Key Risks:

• The company faces the risk of changes in commodity prices as the business serves clients in the mining and resources sector.
• ANG is exposed to the uncertainty caused by the COVID-19 led uncertainties.
• The company is exposed to forex headwinds, due to operations in multiple geographies.

Outlook:

• ANG confirms underlying NPAT (before one-off costs) of over $9 million for FY21. ANG expects a continued robust order book from North America and APAC in 2HFY21.
• The company has also listed a few more potential labour efficiencies to be realised from the ongoing strategic evaluation of the business.
• ANG will estimate the total cost impact once the evaluation is completed and expects these changes to happen in the next three months.
  

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of ANG gave a positive return of 28.57% in the past month and a positive return of 50.0% in the past year. The stock is currently trading close to its 52-weeks’ high level of $0.190. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price with a correction of high single-digit (in % terms). We believe that the company can trade at a slight discount than its peer median, considering the expected EBITDA loss from the workshop in FY21, higher cash cycle, falling net margins, higher debt-equity ratio, and the COVID-19 uncertainties, and forex headwinds. For this purpose, we have taken peers like MaxiTRANS Industries Limited (ASX: MXI), CIMIC Group Limited (ASX: CIM), Monadelphous Group Limited (ASX: MND), and others. Considering the high trading levels, decent increase in returns in the past month and past year, strong order book expected in 2HFY21 for North American and APAC business, valuation, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $0.180, up by ~5.882% as on 22 July 2021.

ANG Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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