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Coronation Fund Managers (CML) assets under management as at end March 2019
Date: 21 May 2019 Category: Stock Market Share price at time of writing: R50.64 We take a look at the SENS announcement from Coronation showing that their assets under management (AUM) as at end of March 2019 was sitting at R586 billion, down almost another R1 billion from their December 2018 assets under management.
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About Coronation Fund Managers
Coronation Fund Managers was founded in Cape Town, South Africa in 1993. We are an investment-led,owner-managed business, with staff ownership of 25%.We are an active investment manager with a long-term valuation-driven investment approach. We focus solely on fund management and earning our clients trust through strong investment performance generated over the long term and appropriate product offering. At the heart of the organisation is a single global investment team and process, which is fully integrated with risk management and corporate governance. The board oversees all group operations. The vision of our business is to deliver investment excellence to our clients; excellence of investment performance and client service. The business is built around two primary client markets.
INSTITUTIONAL
We are a significant participant in the local institutional market, investing assets on behalf of a substantial portion of domestic retirement funds. Our product offering covers all asset classes across a number of geographies in both segregated and pooled mandates. Clients include pension and provident funds, medical schemes, major banking and insurance groups as well as a number of competitors through their multi-manager frameworks. We also manage assets for a growing number of international retirement funds, endowments and family offices. Distribution is conducted primarily through investment consultants, multi-managers and umbrella funds.
RETAIL
Our unit trust management company is one of the foremost managers of long-term assets in the South African collective investment schemes industry. We offer a comprehensive product range, including specialist funds, individual retirement and life products, as well as tax-free investments. All funds are available directly from Coronation, and we distribute through the non-affiliated channels of discretionary managers, independent financial advisers and third-party linked investment service providers. Headquartered in Cape Town, South Africa, we also have offices in London, Dublin, Johannesburg, Durban and Pretoria.
The Coronation Group structure is shown below:
INSTITUTIONAL
We are a significant participant in the local institutional market, investing assets on behalf of a substantial portion of domestic retirement funds. Our product offering covers all asset classes across a number of geographies in both segregated and pooled mandates. Clients include pension and provident funds, medical schemes, major banking and insurance groups as well as a number of competitors through their multi-manager frameworks. We also manage assets for a growing number of international retirement funds, endowments and family offices. Distribution is conducted primarily through investment consultants, multi-managers and umbrella funds.
RETAIL
Our unit trust management company is one of the foremost managers of long-term assets in the South African collective investment schemes industry. We offer a comprehensive product range, including specialist funds, individual retirement and life products, as well as tax-free investments. All funds are available directly from Coronation, and we distribute through the non-affiliated channels of discretionary managers, independent financial advisers and third-party linked investment service providers. Headquartered in Cape Town, South Africa, we also have offices in London, Dublin, Johannesburg, Durban and Pretoria.
The Coronation Group structure is shown below:
Coronation Fund Managers Group Structure
Last financial results
So lets take a look at some of the key numbers in Coronation's financial results:
- Headline earnings per share: R4.20 (down 3.8% from R4.37 in prior year). Current headline earnings of R4.20 a share places the group on a Price earnings (PE) ratio of 10.68
- Dividends per share: R1.65 (which places the group on a dividend yield of 6.6%)
- Assets under management: R586 billion (down 4.5% from R614 billion a year ago)
- Revenue R1.632 billion (down 22% from R2.079 billion)
- Profit before tax: R769 million (down 26% from R1.034 billion)
- Net profit: R578 million (down 26% from R782 million)
- Net profit margin: 35.4% (down slightly from 37.6% in prior year)
- Cash and equivalents per share: 781.4c share
- Cash generated from operations: R758 million (or R2.16 per share)
Coronation Assets Under Management as at end March 2019
Coronation Fund Managers share valuation
Sure the markets performance over the last few years have not been great. And Coronation, whose earnings is highly geared towards a performing stock market has suffered financially due to this and so has their share price. The question is though, whether investors have punished Coronation (CML) to much? Has the decline in its share price been in proportion to their decline in profits/dividends or future earnings prospects? We dont think so. We think the market has been extremely harsh on Coronation Fund Managers. The image below, taken from Sharenet shows the share price performance of CML over the last three years (the line chart) as well as over various other time periods and as can be seen from the graphic the market has not been kind to Coronation investors. The summary below shows the share price returns of Coronation over various time periods.
- 1 week: -0.19%
- 1 month: -6.34%
- Year to date (YTD): 24.79%
- 1 Year: -21.81%
- 3 Years: -23.65%
- 5 Years:-46.43%
While the South African economy and its stock market is not expected to shoot the lights out anytime soon, Coronation has solid recurring earnings it generates which is not directly linked to the performance of the markets. So income generation with low overheads is there. They have a very healthy profit margin, and we believe long term investors will be handsomely rewarded should there be any form of recovery in South Africa's economy and its stock market.
In the mean time investors can buy the share, fetch a handsome dividend yield of 6.6% (before taxes) and buy the share at a very respectable PE ratio of just over 15, Which is still well below the overall JSE All Share Index PE ratio. We believe CML is a very strong long term buy and we would encourage investors to buy CML shares at the current price and put it in the bottom drawer. Basically buy and hold, enjoy the strong dividends and reap the capital growth benefits with a bit of patience.
All things considered we value the group at R62.30 a share. Yes its a far cry from its current price. But at R62.30 a share they will still be trading at a PE of around 18.5%, which is around the overall market average and it would be on a dividend yield of 5.4%
In the mean time investors can buy the share, fetch a handsome dividend yield of 6.6% (before taxes) and buy the share at a very respectable PE ratio of just over 15, Which is still well below the overall JSE All Share Index PE ratio. We believe CML is a very strong long term buy and we would encourage investors to buy CML shares at the current price and put it in the bottom drawer. Basically buy and hold, enjoy the strong dividends and reap the capital growth benefits with a bit of patience.
All things considered we value the group at R62.30 a share. Yes its a far cry from its current price. But at R62.30 a share they will still be trading at a PE of around 18.5%, which is around the overall market average and it would be on a dividend yield of 5.4%