Fund Manager

GQG Partners further consolidates FUM in May: Dividend yield attracts brokers

Tue 07 Jun 22, 1:41pm (AEST)
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Key Points

  • GQG Partners has reported a 4.6% gain in FUM to $94.6bn at the end of May
  • GQG is Morgans’ most preferred across its coverage of fund managers due to an attractive valuation and strength for flows
  • Goldmans is forecasting FCF yield of 6.7%, 7.5% and 8.4% in FY22, FY23 and FY24 respectively

Following on from net inflows of US$3.4bn GQG Partners (ASX: GQG) posted in the three months to March 2022,– amid an extremely challenging macro environment – the US-based ASX-listed global equities manager has reported a 4.6% gain in funds under management (FUM) to $94.6bn at the end of May.

To put the significance of GQG Partners update in context, local rival Magellan Financial Group continued to report monthly declines in FUM to $65bn at the end of May from $68.6bn in April.

Highlights from today’s May update include:

  • International equity rose from $US31.9bn to $US33.7bn

  • Global equity increased from $US28.9bn to $US29.7bn

  • Emerging markets equity rose from $US23.7bn to $US24.7bn

  • US equity increased from $US5.9bn to $US6.5bn

GQG’s share price is down -25.91% for the 12 months, and year-to-date has bounced from $1.73 to a high of $1.90 mid-January back to around $1.63 today.

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GQG Partners 12 month share price snapshot.

 

What brokers think

Despite the company’s inclusion in the S&P/ASX 100, coverage of GQG is limited.

Consensus on GQG is Strong Buy.

Based on Morningstar’s fair value of $2.18 the stock appears to be undervalued.

Following GQG’s reported net profit at FY21, up 81% on the previous year, and ahead of prospectus forecasts, Goldman Sachs revised its FY22, FY23 and FY24 earnings per share estimates by 0.9%, 1.2% and 1.0% respectively due to better-than-expected performance on costs.

Due to strong operating momentum, GQG’s lowest quartile fee offering among global peers, and strong distribution & scalable business model, the broker reiterated a Buy and moved the target price to $2.23 from $2.45.

The broker is forecasting free-cash-flow (FCF) yield of 6.7%, 7.5% and 8.4% in FY22, FY23 and FY24 respectively.

GQG is Morgans’ most preferred across its coverage of fund managers due to an attractive valuation and strength for flows.

The broker retains an Add rating, while the target slips to $2.15 from $2.27, and expects the fund manager to pay a dividend yield of 7.4% in FY22 and 8% in FY23.

GQG share price was down -0.91% at noon today.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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