Jupiter Fund Management PLC

Jupiter Fund Management PLC (LON: JUP) is an FTSE 250 listed asset management entity, focusing on individual and institution clients through its diverse saving products.

On 25 February 2022, JUP expects to release its FY21 results for the year ending 31 December 2021.

Rationale for Valuation – SPECULATIVE BUY at GBX 224.00

• Improved Economic Dynamics: The UK GDP grew 1% in Q4 FY21, while December’s GDP was 6% higher than the year earlier. It reflects that Omicron hit was less severe than anticipated.
• Strong Momentum: The closing AUM has been constantly increasing every quarter since Q1 FY20, reflecting a positive market movement. Moreover, JUP reported solid underlying profitability in H1 FY21. It has consistently shown a strong investment performance and cost synergies.
• Technical Indicator: From a technical standpoint, JUP’s stock price is trading around the lower Bollinger band, while 14-day RSI (~33.54) reflects an oversold scenario.
• Undervalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow) are quite lower than the median of the Financials sector.

Key Risks

• Macroeconomic Uncertainties: US CPI data surged more than expected, which can prompt further expectations of greater tightening from the Federal Reserve this year.
• Subdued UK Macroeconomic Indicators: The UK Composite PMI fell marginally to 53.4 in January 2022 from 53.6 in December 2021, while the UK consumer price inflation breached a nearly 30-year high of 5.4% in the 12 months to December 2021.

Trading Update (for the three months to 30 September 2021, as of 15 October 2021)

   (Source: Company Website)

• Assets under management (AUM): JUP ended Q3 FY21 with £60.7 billion in AUM, reflecting an increase of £0.4 billion from 30 June 2021.
• Net Outflows: Due to the continued weakness in client demand for the UK and European equity strategies, and net redemptions from mutual funds, the Group witnessed a net outflow of £569 million during Q3 FY21.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Book Approach (FY21) (Illustrative)

*Peers: Provident Financial PLC, Ashmore Group PLC, Quilter PLC, and London Stock Exchange Group PLC.

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

Conclusion

JUP has shown improvement in AUM with strong gross flows. Its earnings per share rose 15% year-on-year in H1 FY21 and it kept an interim dividend unchanged at 7.9 pence per share. The positive market movements supported the net inflows across fixed income and key growth funds. Therefore, it is well-positioned to generate an incremental value for its shareholders. The stock made a 52-week High and Low of GBX 309.40 and GBX 221.40, respectively.

Based on the AUM growth, strong net inflows, robust profitability, we have given a “SPECULATIVE BUY” stance on Jupiter Fund Management PLC at the current market price of GBX 224.00 (as of 11 February 2022, at 11:46 AM GMT), with a lower-double digit upside potential based on 1.55x Price/ Book (approx.) on FY21E Book Value per share (approx.).

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.

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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