The names are respectively IG Group (IGG), which had a Pre Close update, Aberdeen Asset Management (ADN) who announced their finals and Kingston Communications (KCOM) with interims. So I'll have a quick look at those in today's post.
The IG Group update was quite frankly pretty thin on detail but they did say that they had performed well in quieter markets over the last three months and that revenue in the second quarter of the financial year will be slightly ahead of the first. They said it was too early to call the full year outcome and they are not having a meeting or conference call so little in the way of changes for now presumably. They did however say that they remains on track as they approach the second half and that they are pleased with the ongoing strength in client recruitment in all of their markets and the progress they are making on delivering their strategic initiatives.
This one currently features in the CIS Portfolio having been purchased at inception. However it is at risk of being ejected at the next review due at the end of the year as it currently Scores 74 as the score has declined on the back of the flat dividend last year. It also looks relatively expensive on a PE of around 17-18x, but the expected dividend yield of around 4% and an earnings yield of 6.4% makes it look better value on the scores where it comes in with a score of 71. So overall OK, but probably nothing to get excited about based on the statement and the rating.
So moving on to Aberdeen Asset Management for a bit more excitement, although in this case maybe it has been the wrong kind of excitement, as the shares have been weak on the back of them seeing outflows related to their exposure to emerging markets. Any way the full year results didn't surprise particularly with the earnings of 30p matching forecasts, although this was down from 31.1p last year according to the announcement but up on Stockopedia's adjusted numbers. Meanwhile the dividend at 19.5p up by 8.3% was 2% ahead of the 19.1p forecast on Stockopedia and not far off the 19.6p that is currently being forecast for 2016. This suggests that we could see dividend upgrades to reflect this, although I note that earnings are currently forecast to fall to 26p which would only cover a 19.6p dividend 1.33x so on that basis I guess it's not guaranteed that we'll see a dividend upgrade despite today's better than forecast dividend. As discussed above AuM came in at £283.7 billion (2014: £324.4 billion) reflecting the negative sentiment towards Emerging Markets but they have been diversifying with some smaller acquisitions and cutting costs on the back of the more major acquisition of Scottish Widows in the previous year. Despite the spend on acquisitions and share buy backs, at year end, the Group had a cash position of £567.7 million.
With the shares off nearly 4% this morning to 322p this leaves them on a reasonable looking PE of around 12.4x with a dividend yield now at 6% based on the current 19.6p forecast. It has a Compound Income Score (CIS) of 87 helped by high value, financial security and operational quality scores. So if you are prepared to look through the current emerging markets weakness then this one could be interesting down here as a contrarian play. This is reinforced by valuations as we saw in Part 3 of my recent Back to the Future series of posts that emerging markets were looking cheap against their history and against developed markets. While on the company valuation it looks cheap relative to its peers such as Henderson, Jupiter and Schroders as they have all outperformed in the last 12 months whereas Aberdeen has underperformed by more than 20% on the back of the emerging markets worries.
Fortunately the CIS Portfolio has been invested in Jupiter and Schroders rather than this one as they scored higher than this one when the portfolio was started back in April.
Finally in brief the interim results from Kingston Communications look OK if rather dull in terms of growth, although they did confirm the latest 10% increase in the dividend which they had promised until this year. Beyond that they help[fully provided some guidance that they expect to pay at least 6p for 2017 & 2018 which is in line with current forecasts for 2017 and would put it on a yield of over 6% at the current 97p, although this does represent a slowing in the growth rate to around 2% if they just pay 6p in 2017.
I guess time will tell on that but on the outlook they struck a positive tone saying:
"The Group's performance shows good progress, reflecting its focus on growing those areas of strategic importance. The Board is committed to its stated strategy and, while certain legacy activities will continue to decline, is confident that it will produce profitable growth. The Group plans to accelerate further its investment in those areas that support this. "
This one scores a lowly 36 on the CIS, despite the 6% yield, as it falls down on cover, financial security and the value is only just above average given a low earnings yield. So with growth in the dividend now also expected to slow too, it is hard to get excited about it, apart from the yield, which is the main attraction. So very much a bond like share, albeit with perhaps some modest growth in the coupon expected going forward. Thus it seems unlikely to me that there is enough in this update for them to break above the 100p - 105p resistance which has been in place for a while now, so hold for yield at best I would say.