abrdn PLC (LON: ABDN)

abrdn PLC (LON: ABDN) is an FTSE 100 listed global asset management entity that offers solutions like fixed-income, emerging market equities, real estate, and multi-asset solutions. The Company was formerly known as Standard Life Aberdeen PLC.

Recent Trend of Dividend Payments

ABDN remained committed to delivering sustainable dividend over the medium term. The Company will pay a final dividend of 7.30 pence per share for FY21 on 24 May 2022, while the ex-dividend date was 07 April 2022. ABDN had already paid an interim dividend of 7.30 pence per share on 28 September 2021. Thus, the total FY21 dividend remained around 14.6 pence per share, the same as FY20.

Growth Prospects

• Strategic Initiatives: The key strategy of ABDN would be to drive client-led growth across three business segments. Moreover, ABDN had identified several strategic priorities such as Growth in Asia, UK adviser and consumer markets, Solutions and Responsible investing.
• 3-Year Investment Performance: ABDN’s three-year investment performance remained stable at 67% of AUM above benchmark.

Key Risks 

• Federal Reserve Rate Hike: The Federal Reserve announced an 0.5% increase in interest rates on 04 May 2022. Meanwhile, the Bank of England had made a fourth consecutive interest rate hike on 05 May 2022. It may adversely impact the global equities.
• Bank of England Guidance: The Bank of England had trimmed its economic growth forecast for 2023 and is expected to show a contraction of 0.25% from a previous estimated growth of 1.25%. Moreover, it had also warned of UK inflation reaching around 10% very soon.
• Risk of Inflation: The Group is prone to the impacts of inflation, which has been reported at 7% in the period 12 months to March 2022, and there is a possibility of further increase moving ahead.

Key Fundamental and Shareholders Statistics of abrdn PLC.

Silchester International Investors, L.L.P. is the most significant shareholder as it holds nearly 109.50 million shares. 

FY21 Financial Highlights (for the year ended 31 December 2021, released on 01 March 2022)

(Source: Company Website)

• Fee-Based Revenue: The fee-based revenue went up by around 6% during FY21.
• Increase in AUMA: The Company’s Assets under Management & Administration had shown a decent improvement of around 1% during FY21.

Share Price Performance Analysis

(Source: Refinitiv, Research done by Kalkine Group)

On 06 May 2022 at 10:30 AM GMT+1, ABDN’s shares were trading at GBX 183.70, down by around 0.97% against the previous day closing price. Stock 52-week High and Low were GBX 300.40 and GBX 164.80, respectively.

On a daily chart, the stock price is sustained around the lower Bollinger band. Hence, there could be an uptick in the stock price in the near term. Also, the 14-days RSI of ~32.82 illustrates an oversold territory.

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Business Outlook

The Company had witnessed improved growth momentum during FY21, illustrated by the improved investment performance. ABDN had formulated a new strategy focused on returning the business towards revenue and earnings growth. Moreover, it would emphasise delivering sustainable returns to shareholders in the form of dividends. ABDN had targeted to reach a cost/income ratio of around 70% by the end of 2023. ABDN would also focus on stabilisation of revenue yield in the near term by meeting client preferences for higher-yielding assets. In a nutshell, ABDN would adopt a disciplined approach with a primary focus on generating sustainable returns for shareholders.

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the robust dividend payments, recently completed acquisitions, robust profitability growth, and support from the valuation as done using the above method, we have given a “Buy” recommendation on abrdn PLC at the current market price of GBX 183.70 (as of 06 May 2022 at 10:30 AM GMT+1), with lower-double digit upside potential based on 17.23x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

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

Note 2: Investment decisions should be made depending on the investors’ appetite for 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 is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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