Shares of BT Investment Management Ltd (ASX: BTT), or BTIM, have spiked around 5% today after the fund manager delivered its fourth consecutive record full-year result.
The improved result was achieved despite tougher market conditions, with the main highlights as follows:
- Average funds under management (FUM) up 7% to $80.2 billion
- Fee revenue increased by 13% to $493.9 million
- Particularly strong growth in performance fees, up 49% to $77.2 million
- Operating expenses up 11% to $297 million
- Operating profit margin up 3% to 40%
- Statutory net profit after tax (NPAT) up 12% to $142 million
- Cash NPAT up 18% to $156 million
- Cash earnings per share up 15% to 50.8 cents per share
- Final dividend of 24 cents per share, bringing the full year dividend to 42 cents per share – an increase of 14% from last year.
Overall, this was another fairly strong result that continues to build on the positive earnings momentum from recent years.
One of the most pleasing aspects of the latest result has been the continued growth in average FUM and the accompanying increase in base fee revenue, as highlighted below.
This is especially encouraging when you consider the fund manager was directly exposed to the volatility created from Brexit through its UK-based JOHCM division.
As highlighted by the chart below, fund inflows into this division are now recovering strongly after the period of uncertainty.
Impressively, at the end of the September reporting period, total FUM was sitting at a record high level of $84 billion.
Pleasingly for shareholders, the fund manager has now repaid all of its outstanding debts while still managing to increase its dividend for the fifth straight year. BTIM now has a net cash balance of $174.2 million, an increase of 17% over last year.
Outlook
BTIM hasn't provided any specific earnings guidance for FY17 but the fund manager has started the new financial year off strongly with record FUM and inflows of $2 billion already funded.
Valuation
At the current share price of $9.50, the shares currently trade on a price-to-earnings ratio of 18 and provide investors with a trailing dividend yield of 4.4% (partially franked).
Is it a buy?
As a current shareholder, I am pleased with today's result but I don't think the shares are a screaming buy just yet.
The fund manager looks like it will have to grapple with a number of headwinds during FY17 including a potentially stronger Australian dollar and global equity markets that continue to lack any real direction.
With that said, I'm more than happy to hold on to my shares at current prices and would be a keen buyer below $8.50 per share.
