Now offering serious value
I liked Coronation over a year ago when it was at around 6 000c/share. Now, at below 5 000c/share and with a dividend yield of over 9%, I really like it.
Results for the year to 30 September saw its headline earnings per share (HEPS) and dividend down 4%, while assets under management (AUM) was also down. Outflows do seem to have slowed.
Certainly this has been another tough year for the business, but the price is reflecting much tougher conditions and offering some serious value.
The dividend yield itself is a great rate to be paid for holding the share, while the market capto-AUM is also at historic lows. A market cap of some R17bn and AUM of R587bn results in a ratio of 2.9%, whereas the average is 3.5% to 4.5%. So, a decent discount to the average then.
Asset management, and Coronation, is not going away. While bleak local markets and a consumer under pressure have hurt them, neither of those two events are permanent.
When things start to improve, Coronation will see a pick-up in their AUM, resulting in higher profits and ultimately the share price. ■