Abrdn PLC

Abrdn PLC (LON: ABDN) is an FTSE 100 listed global asset management entity that provides a comprehensive range of fixed-income, emerging market equities, real estate, and multi-asset solutions. Standard Life Aberdeen PLC became Abrdn PLC on 2 July 2021.

The ex-dividend date for the final dividend is 7 April 2022.

Rationale for Valuation – BUY at GBX 193.10

• Improved GDP: Britain’s economy surged more than anticipated with 0.8% month-on-month growth in January 2022.
• Strategic Growth and Disciplined Approach: During FY21, ABDN showed financial strength underpinned by the delivery of its strategies. Post rebranding in July 2021, investment platform integration, and the acquisition of a majority interest in Tritax, the Company has shown its focus on meeting strategic priorities and client needs.
• Synergy Benefit and Outperformance: It has achieved target annualized synergies of £400 million. Moreover, its three-year investment performance remained stable at 67% of AUM above the benchmark.
• Business Simplification: The Company also progressed well in simplifying the business by exiting the Indonesian market and disposing of Parmenion and Nordics real estate business.
• Technical Indicator: From a technical standpoint, the 14-day RSI (~36.99) is close to the oversold zone, while the price is hovering around the lower Bollinger Band.
• Undervalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, Price/Cash Flow, and Price/Book) are quite lower than the median of the Financials industry.

Key Risks

• Subdued Macroeconomic Conditions: The dented risk appetite of investors amid the Ukraine war crisis, expectations for further interest rates hikes, and uncertain demand outlook.
• Business Risk: The moderation in trading activity and client acquisitions can impact the Company’s growth trajectory.

Financial Highlights (for the year ended 31 December 2021, as of 1 March 2022)

 (Source: Company Website)

• Financials Growth: During FY21, fee-based revenue and adjusted operating profit jumped 6% and 47%, respectively.
• Dividend: The FY21 full-year dividend was in line with its dividend policy, reflecting 1.18x covered by adjusted capital generation.

One Year Share Price Chart

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

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

*Peers: 3i Group PLC, and Aviva PLC.

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

Conclusion 

Based on the increased revenue, strengthened capital position, good progress in its growth vectors, business simplification, and favorable valuation conducted above, we have given a “BUY” stance on Abrdn PLC at the closing price of GBX 193.10 (as of 11 March 2022), with lower double-digit upside potential based on 0.69x Price/NTM Book (approx.) on FY22E Book Value per share (approx.).

Nevertheless, 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.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.