Ninety One’s share price up 11.22 percent on higher profit
Twenty-ninth year in business ended with record earnings and a quality client base
NINETY One’s share price surged by 11.22 percent on the JSE yesterday after the investment manager reported an annual 12 percent increase in profit after tax with its chief executive, Hendrik du Toit, eyeing long-term opportunities ahead.
Ninety One completed its demerger from Investec Asset Management and listed separately on the London Stock Exchange and the JSE in March.
For the year to end March, profits after tax increased to £156 million (R3.5 billion), but this was offset by the decline in asset under management of 7 percent to £103.4bn hit by the Covid-19 pandemic, which caused market volatility around the globe.
Du Toit said last year was a momentous year for the group.
“We ended our 29th year in business with record earnings, a quality client base from across the world, highly motivated people and an experienced leadership team, but were challenged by the consequences of the Covid-19 pandemic,” Du Toit said.
As a result, net inflows declined by 1 percent to £6bn and its short-term investment performance was negatively affected by the extreme market correction in March.
Its adjusted operating profit increased 10 percent to £189.9m, while basic earnings per share increased by 11 percent to 16.8 pence a share and headline earnings per share inched up 12 percent to 16.8p.
The group said it paid its final dividends before the demerger and its board recommended no further ordinary or special dividends for the 2020 financial year.
The share price climbed to R47 a share, up from Tuesday’s closing price of R42.26.
Du Toit said the near-term challenges facing emerging markets relating to Covid-19 had triggered a downturn, but had not changed their long-term view.
“On the contrary, we expect the next few years to provide our investors with compelling long-term opportunities in both developed and emerging markets and risk assets in general.
“The stable and experienced investment teams at Ninety One are motivated to make the most of these opportunities for our clients and shareholders,” Du Toit said.
Looking ahead to the new year, Du Toit said the company recognised the challenging market conditions and competitive environment, which they faced.
“Our well-tested and diverse set of investment capabilities are in areas relevant to our clients, as evidenced by recent flows.
“We have solid bridgeheads into the largest markets in the world and we have maintained positive momentum in our original markets.
“We expect the appetite for risk assets to increase over time as the extreme volatility recedes, and we see abundant opportunities for alpha generation for our clients,” he said.
Nolwandle Mthombeni, an investment analyst at Mergence Investment Managers, said the group had performed well under a tough environment.
“This was a good performance in a very tough equity and bond market. The performance also highlighted the benefits of geographic diversification,” Mthombeni said.