Miton's share price 'will go up'

Shaken by the loss of two star fund managers in April, investment firm Miton looks to have weathered the storm judging by full-year results Thursday. Its shares responded well, having doubled since the Brexit crash and now trading at prices not seen since summer 2014.

When co-managers George Godber and Georgina Hamilton quit the UK Value Opportunities fund, which accounted for nearly a third of Miton's £2.8 billion in assets at the time, they triggered a sharp slide in Miton's share price.

But Miton acted quickly to fill the gap and said today that replacement manager Andy Jackson had delivered strong first quartile performance since he took over in July, despite volatile market conditions.

Across the group, assets under management have climbed to £3.1 billion at the end of February, with the average figure across 2016 up 20% at £2.8 billion.

Miton executive chairman Ian Dighé, who is stepping aside to take on a non-executive role, said the business demonstrated its resilience by regaining momentum over the second half of the year.

The company has also sought to diversify its fund range, with its multi-asset funds achieving net inflows for the year totalling £154 million, of which nearly all related to the Cautious Monthly Income Fund.

This year, Miton is planning to broaden its fund range with the imminent launch of a new fund specialising in listed global equity infrastructure assets.

This will be run by Jim Wright, who joined Miton in January having managed the infrastructure mandate of the British Steel Pension Fund for the past ten years.

Dighé said: "We believe this is an attractive asset class and one where our strongly differentiated approach will appeal to clients."

Since 2011 Miton has launched five new equity funds. These funds now have client assets of £1.5 billion and all are top quartile performers since their respective launch dates.

With adjusted pre-tax profits up by 70% to £5.1 million, Miton said substantial net inflows experienced in quarters one and four of 2016 meant it was in a strong position moving into 2017. As a result, the company increased its annual dividend by 49% to 1p a share.

The group added that it remains robustly financed for "whatever the markets may hold", with £21.3 million of cash on hand at the end of 2016.

Shares rose 8% to 40p today, putting the shares on a forward price/earnings ratio (PER) of about 18, and continuing the recovery seen since last summer's departures when the stock slumped by more than 20% in one session.

FinnCap analyst Jeremy Grime said market forecasts were for 10% revenue growth and 27% pre-tax profits growth in 2017.

He said: "Given that most of the funds are in the top quartile of performance, and there's a recent hire who aims to launch a global infrastructure fund, this would appear a reasonable expectation.

"As the company reaches scale the margins from this business will grow resulting in strong profit growth (27% forecast). The result is the PER will come down rapidly and the EV/AUM will expand. That means the share price will go up."

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