City of London Investment Group delivers a strong dividend and very strong robust earnings stream says Zeus Capital (LON:CLIG)

City of London Investment Group plc (LON:CLIG) is the topic of conversation when Zeus Capital’s Research Director Robin Savage caught up with DirectorsTalk for an exclusive interview.

Q1: City of London Investment Group has published its interim results for the six months to December 2021, what were the key points we should be aware of?

A1: First of all, they had a detailed trading update on the 19th of January so these interim results have been largely foreshadowed by this detailed trading update which revealed that at the end of 2021, group Funds under Management were $11.1 billion, that was £8.2 billion. That included net inflows in the six months to December of $59 million which in the first quarter was £172 million of net outflows and then strong net inflows in the second quarter of £231 million.

The statement in January also revealed solid relative investment performance across investment strategies, a good active pipeline across all its major products, it also highlighted the income net of third party commissions accruing at £4.9 million. We expect for the full year, the net income to be £5 million a month so it’s line with what we were expecting and overheads were running at £1.6 million and we’d forecast just over £1.6 million a month so we felt at the time that we were not going to change our forecasts and we don’t anymore.

The statement in January revealed a net cash of £24.5 million at the end of December, we now have details of the cashflow which we have included in a report to shareholders. Also, the trading update revealed an 11p interim dividend and 13.5p per share special dividend so all of that was foreshadowed and we’ve now got the detailed interim results which we can see the line by line details which enables me to look  forward to the rest of the year.

Q2: With that in mind, what impact has this had on your forecasts?

A2: We aren’t going to change our numbers but I have been able to look line by line at our forecasts and I feel very conformable that my forecasts for the full year should remain unchanged.

I think the remarkable thing about the group is the way in which the acquisition of Karpus just over a year ago has essentially stabilised the business to be much more a global fund management business rather than simple an emerging markets business.

Q3: How do you see City of London Investment Group’s valuation?

A3: At £5.20 a share, the shares are trading at just over 11 times the current year earnings, the dividend yield including the special dividend is 9%, if you were to exclude the special dividend, you have a 6.4% dividend yield so a very attractive dividend yield with a strong net cash position. In fact, you probably should think that special dividends may well be a regular feature if there aren’t other things to put their money into.

I suppose the key point about the company is that they have been very predictable over a long period of time, they run a very tight ship with a predictable revenue and profit stream that enables us to forecast the dividend. The major uncertainty is the extent to which the business is able to attract inflows so we do need to see how the pipeline of new business comes through but in terms of a business that delivers strong shareholder returns, it’s got the ability, and has been delivering, a strong dividend stream and very strong robust earnings stream.

So, it’s been able to deliver double-digit shareholder returns over the last twenty years and we expect that to continue.

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Share on facebook
    Facebook
    Share on twitter
    Twitter
    Share on linkedin
    LinkedIn
    City of London Investment Group plc

    More articles like this

    Fintel plc

    Fintel core revenue growth is higher than Zeus forecast

    Fintel plc (LON:FNTL), the leading provider of Fintech and support services to the UK retail financial services sector, has released a trading update for the six months to 30 June 2022, which reveals: Core revenue grew c.9% to

    Shoe Zone plc

    Shoe Zone analyst Zeus upgrades FY22 adjusted PBT forecast

    Shoe Zone plc (LON:SHOE) Better than expected demand and further strong margin performance leads to an upgrade in FY22E adjusted PBT from “no less than £8.5m” to “no less than £9.5m”. Zeus revenue forecasts increase by £1.5m (1.0%)

    OnTheMarket Plc

    OnTheMarket analyst Zeus confident in forecasts

    Foxtons, one of London’s leading estate agencies with more than 50 interconnected branches across London, has signed an agreement to advertise its UK residential sales and letting properties at OnTheMarket plc (LON:OTMP). Zeus view: Foxtons, the well-known London

    SpaceandPeople analyst Zeus restores estimates and valuation

    SpaceandPeople plc (LON:SAL) secures, sells, and manages flexible space for brand experiences, short term promotions and retailing in high footfall venues for its customers, including in shopping centres and travel hubs. The Group has issued a positive pre-close

    Lookers Plc

    Lookers shares are still undervalued says Zeus

    Lookers plc (LON:LOOK) has released an H1 trading update reporting a continuation of strong performance year to date. H1 2022 underlying PBT is expected to be c. £45m and Management anticipate full year PBT will also be ahead

    No more posts to show