This report is an updated version of the report published on 30 May 2022 at 08:34 AM GMT+1.

Jupiter Fund Management PLC

Jupiter Fund Management PLC (LON: JUP) is an FTSE 250 listed asset management company with a focus to achieve long term-investment objectives of clients.  

JUP has scheduled the interim results for the period to 30 June 2022 on 29 July 2022.

Investment Rationale for Valuation –Speculative Buy at GBX 178.40

• Decent Fundamentals: The Group reported an impressive increase of 39% in statutory profit before tax to £183.7 million in FY21, compared to £132.6 million in FY20. Also, the net management fees increased by 18% to £453.7 million in FY21, compared to FY20. Subsequently, it reported a 3% increase in assets under management to a record level of £60.5 billion during FY21 end.
• Solid Profitability: Basic earnings per share grew by 30% to 27.6 pence in FY21, compared to 21.3 pence in FY20.
• Robust Investment Performance: It has delivered 58% of mutual fund AUM above median over the past three years.
• Undervalued Multiples: On a forward 12-month basis – key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are undervalued against the median of the Financials sector.

Key Risks

• Macro Risk: The current investment scenario has been very volatile in nature owing to geopolitical tensions and inflation concerns. Moreover, the expected rate hike by the Federal Reserve is anticipated to put pressure on the equity and investment markets in the near term.
• Subdued Demand: The demand in the Retail & wholesale channel can remain subdued in the short-term and impact net inflows.

AuM Update (for the three months to 31 March 2022, as of 26 April 2022)

• AUM: Assets under management of £55.3 billion, it was slightly lower than value at the end of FY21; however, it remained resilient given the negative market returns and worsening geopolitical events.
• Strong Inflows: Inflows from Institutional clients remained solid, primarily supported by the funding of a mandate from Brunel into Global Sustainable Equities.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Valuation Methodology: Price/Book Approach (FY22E)

*Peers: Ashmore Group PLC, Close Brothers Group PLC, and IG Group Holdings PLC.

*All selected peers are LSE-listed Companies from the Financials sector.  

Conclusion

The short-term performance might be impacted by the macroeconomic factors; however, the Group is positive about its long-term strategy.

Based on the impressive results, increase in AUM, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Jupiter Fund Management PLC at the closing market price of GBX 178.40 (as of 27 May 2022) with lower double-digit upside potential based on 1.27x Price/NTM Book (approx.) on FY22E book value per share (approx.).

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.

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.’

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 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 unfavorable movement in the stock prices.

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