Its share price may be in the doldrums, but the latest figures from Liontrust Asset Management (LIO) suggest the specialist asset manager is navigating a challenging investment backdrop with aplomb. Despite lower net inflows over the year, it said that assets under management and advice (AuMA) hit £33.5 billion in fiscal 2022 , up 8.5% on the £30.9bn recorded in the previous year.
The U.K. sustainability-focused investment manager reported revenues of £231m for the year ended 31 March 2022, a 41% increase on the previous financial annual period, and a rise in both reported and adjusted pretax profit, up 127% and 64% respectively, to £79.3m and £96.6m.
It said that the performance reflects its positioning to take advantage of ESG and future growth trends, giving it confidence to declare an interim dividend of 50.0 pence a share, bringing the total dividend for the year ending to 72.0 pence a share for the year, a year-on-year increase of 53%.
One of the highlights for the group was the acquisition of Majedie Asset Management back in April which added £5.2bn to the AuMA, which would take the total up to £38.7bn, if included.
In the final quarter of the financial year, Liontrust had net outflows of £0.4 billion, which reflected the negative sentiment among investors generally. While 4Q was the first quarter with net negative retail flows, Liontrust saw overall positive net inflows of £2.5bn for FY22 after generating the second highest net retail sales in the UK in 2021, according to the Pridham Report.
Value rotation
Liontrust said its recent experience of a more challenging period for short-term performance over 4Q came amid the market rotation from quality growth stocks to value companies.
"This rotation has been exacerbated by rising inflation and subsequent increases in interest rates in the UK and US, with the former partly as a result of supply chain issues caused by the ongoing effects of the pandemic and the war in Ukraine,” the company outlined to investors" it said.
As well as its M&A activity, the company has expanded via its fund offering, the firm’s third pillar of its strategic objectives. Chief Executive John Ions told investors that Liontrust had experienced a "growing demand for a broader range of funds" over the year, demand that was met with the launch of European Growth and Global Dividend funds.
Despite potential headwinds, Ions remains positive in his outlook: “Whatever the challenges ahead for the global economy, our investment excellence, robust processes and high-quality service give me great confidence that over the long term we can continue to deliver positive outcomes for our investors and therefore our shareholders and other stakeholders."
He further acknowledged that ESG remains a core part of Liontrust's overall business. In fact, the company signed the Net Zero Asset Managers' Initiative back in May 2022, which it stated at the time would “surface the invisible in terms of the various approaches of investors".
Liontrust’s Chairman, Alastair Barbour, said these aims, combined with internal governance structures "provide a solid platform on which the group can expand its expertise to ensure that Liontrust's offering in ESG and sustainable investment is fit for purpose for the next decade".
Analysts at Singer Capital Markets reiterated their ‘Buy’ recommendation on the stock, but has updated its model to reflect the more challenging market conditions, with an 8-11% reduction in earnings estimates.
“We note a 6%+ prospective dividend yield generously covered by earnings with significant net cash (20%+ market cap) and a BUY recommendation with a 1850p 12m price (from 2000p)” it said.
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