- Shares fall despite results beating expectations
- Assets under management miss estimates
- ESG fund flow outlook challenging
Shares in FTSE 250 asset manager Liontrust Asset Management (LIO) eased 1.6% to 915p despite the group announcing full year results that were ahead of expectations.
The market focused instead on the slowdown in net asset flows, specifically for ESG where performance headwinds and increasing competition are creating an increasing challenging environment.
Adjusted profit before tax of £97 million was 8% ahead of consensus estimates, while adjusted diluted earnings per share increased by 59% from 80.1p to 127.6p. The total dividend for the year rose by 53% from 47p to 72p.
However, assets under management declined by 11.6% from the £38.7bn at the end of March 2022 (which is a pro-forma figure including £5.2bn from the Majedie acquisition, which completed on 1 April) to £34.2bn at 17 June 2022.
ESG FLOWS: A CURATE’S EGG
Liontrust has built a rich pedigree in the ESG discipline, running ethical funds for over 20 years and managing more than £10 billion of assets in this space.
In 2020, the sustainability investment team won three awards, with Harriet Parker named ESG fund manager of the year at the Women in Finance awards.
However, moving forward the demand for ESG funds looks more muted. Many funds have suffered from holding technology stocks that have been sharply de-rated.
According to Bloomberg, after three years of constant inflows, ESG equity funds experienced $2 billion of outflows, the biggest on record, just last month.
EXPERT VIEWS
Peel Hunt analyst Robert Sage is concerned that assets under management were below his estimate:
‘If we assume that average assets under management for the year to March 2023 could be broadly similar to March 2022, then our profit estimates for this year could fall by mid single-digit percentage.’
Numis analyst David McCann flagged that Liontrust shares had already substantially de-rated this year following a meaningful slowdown in net flows.
'The shares now trade in line with traditional peers at around a high single digit price earnings multiple, and a yield approaching 8%. We feel this is justified in the short term, until flows show signs of a sustained recovery’, added McCann.
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