Schroders PLC

Schroders PLC (LON: SDR) is a British-based multinational asset manager which based in London, United Kingdom. The company operates from 35 countries across Europe, the Americas, Asia & Australia and the Middle East. It provides advisory and consultancy services to high net worth clients, financial institutions, large corporate, and other institutions.

The group is expected to announce its half-yearly results on 30^th July 2020.

Recent News
On 5th March 2020, Schroders had announced the appointment of Matthew Westerman, as a non-executive Director. The Group also announced that Philip Mallinckrodt would be retiring as a Director of Schroders on 30 April 2020.

Trading Update – Q1 FY2020 (31st March 2020, GBP, Million)

(Source: Interim Results, Company Website)

On 16^th April 2020, the group affirmed in the Q1 FY2020 results that the group had performed resiliently despite the economic uncertainty and market volatility. The group has reported a robust cash flow with a net new business of GBP 30.4 billion in Q1 FY2020. The group has continued the support to clients without seeking any government aid or adopting any severe measure like furloughing any employees. The group has encouraged its employees to donate 25% of three months of salaries besides other grants to help those who are affected by Covid-19. The group also affirmed to hold a strong capital position and confident about future growth. The group’s asset under management stood at GBP 411.8 billion as at 31^st March 2020.

Share Price Performance

Daily Chart as on 16^th April 2020, after the market closed (Source: Thomson Reuters)

SDR’s shares closed trading at GBX 2,477 on 16^th April 2020, up by 2.78% against the last day closing price. Stock's 52 weeks High and Low are GBX 3,465.00/GBX 1,711.00.

Valuation Methodology


Conclusion
The group is confident about its growth in the long term as it has performed quite resiliently despite challenging scenario and holds a strong balance sheet position. The year 2020 started a good note with the trade deal between the US and China, and it is expected to bring capital investments. On the other hand, the outbreak of Covid-19 has brought unprecedented uncertainty in the market. Hence, there are some uncertainties in the near-term market. However, the risk assets would get benefit from the low-interest rates scenario. Moreover, the group is quite diversified with international footprints and well-positioned for long-term opportunities.

Over the past three years (FY16 - FY19), the company’s net income surged from GBP 490.20 million in FY16 to GBP 495.7 million in FY19. Compounded annual growth rate (CAGR) stood at 0.37 per cent.

Based on decent prospects and support from the valuation as done using the above method, we have given a “Hold” recommendation at the closing price of GBX 2,477 (as on 16^th April 2020).
 
*All forecasted figures and peers Information has been taken from Thomson Reuters.

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