Brooks Macdonald: Forecasts up on positive outlook, dividend +8%

My Equity Development note covering BM’s interims (to 31 Dec 22) is out. You can read the full note here (short summary below). It was a solid H1-23 with FUM up 4% to £16.2bn, from £15.7bn on 30 Jun 22.

Net inflows totalled +£347m and investment performance +£212m (+1.4% compared to -0.3% of the benchmark MSCI PIMFA Private Investor Balanced Index). 

This was BM’s 7th consecutive quarter of positive net flows, with impressive resilience through the 2022 bear market, pointing to very strong fundamentals when it comes to attracting and retaining client assets. In calendar-2022, BM’s net inflow rate was one of the highest among a London-listed peer group of wealth managers and platforms.

Y-o-y financial performance was down, primarily because market falls resulted in a lower average FUM compared to H1-22. H1 revenue fell 5% to £58.9m (H1 22: £61.9m) and underlying PBT 18% to £14.5m (H1 22: £17.6m). Conversely, revenue and profits have potential to rise again if FUM continues to increase.

BM’s balance sheet remains strong, with net assets of £151m, cash and equivalents of £38m, and no debt.

An interim dividend of 28.0p has been declared, up 8% on H1 22 (26.0p), indicative of the strong capital position and board confidence in BM’s prospects.

BM’s PE ratio is well below peers.

BM will be reporting an FUM update for Q3 of FY23 (to 31 Mar 23) on 13 April 2023.

All of my previous research notes covering Brooks Macdonald can be found at this link.

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