Jupiter Fund Management PLC

Jupiter Fund Management PLC (LON: JUP) is a 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 248.20

• Favorable Macroeconomic Factors: As the China’s central bank has signaled an easing of monetary policy to aid the economic recovery, it can support the financial markets overall.
• Growth in AUM: The closing AUM has been constantly increasing every quarter since Q1 FY20, reflecting a positive market movement. Moreover, JUP reported a solid underlying profitability in H1 FY21.
• Technical Indicator: From a technical standpoint, JUP’s stock price is trading around the lower Bollinger band, while 14-day RSI (~40.41) reflecting an oversold scenario.
• Undervalued Multiples: On forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are quite lower than the median of the Investment Banking & Investment Services industry.

Key Risks

• Potential Financial Risk: China’s Evergrande default risk can explode into a potential financial market crisis as the Company holds some US$300 billion in liabilities.
• Macroeconomic Risk: The early tapering of assets by the US Federal Reserve can strengthen US Dollar, can cause equity market volatility, and other financial risks.

Trading Update (for the three months to 30 September 2021, as on 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 Inflows: The positive market movements supported the net inflows across fixed income and key growth funds.
• Net Outflows: Due to the continued weakness in client demand for 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)

Conclusion 

Investors are recommended to scan their respective risk-return profile before punting on this penny stock since it is exposed to high volatilities.

Notwithstanding, 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. It has consistently shown a strong investment performance and cost synergies. Therefore, it is well-positioned to generate an incremental value for its shareholders. The stock made a 52-week High and Low of GBX 310.80 and GBX 231.80, respectively.

Based on the AUM growth, strong net inflows, robust profitability, we have given a “SPECULATIVE BUY” stance on Jupiter Fund Management PLC at current market price of GBX 248.20 (as on 23 November 2021, at 8:50 AM GMT), with lower-double digit upside potential based on 1.76x Price/ Book (approx.) on FY21E Book Value per share (approx.).

*All forecasted figures and Industry Information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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