M&G PLC

M&G PLC (LON: MNG) is an FTSE 100 index listed investment management Company engaged in savings and investments business that manages institutional and retail customers.

The Company announced a second interim dividend of 12.2 pence per share on 08 March 2022, with the ex-dividend date of 17 March 2022.

Investment Rationale – SELL at GBX 227.30

• Decline in After-tax Profits: The IFRS after tax profits of the company was £92 million in FY21 compared to £1,142 million in FY20.
• Macro-Economic Factors: Record inflation, central bank rate hike, and wage pressures are expected to dominate the market. These factors could wreak havoc on a company’s profits and the stock market.
• Ukraine Tension: The mounting concern over the Russian invasion in Ukraine can continue to weigh on the equity market.
• Technical Indicator: Technically, the 14-day RSI (~62.49) is approaching an overbought territory, signalling a short-term decline.

Annual Results of FY21 for the year ended 31 December 2021 (released on 08 March 2022)

• Financial Outlook: The Company achieved a capital creation of £2.8 billion over two years versus an earlier target of £2.2 billion by the end of 2022.
• Capital Generation: Because of equity market conditions and higher returns, total capital creation for FY21 was £1,822 million against £995 million in FY20.

Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)  

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

Conclusion                                                                                                   

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.

Based on the decrease in operating profits, Ukraine Crisis, bearish technical indicators, coupled with the unfavourable valuation conducted above, we have given a "SELL" recommendation on M&G PLC at the closing market price of GBX 227.30 (as of 14 March 2022).

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.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which 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 5: ‘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.’

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