City of London Investment Group reports strong growth and cost reductions in Q2 2024

City of London Investment Group plc (LON:CLIG) has announced its trading statement for 2Q’24. Both developed and emerging markets bounced back from a weak 1Q’24 and posted gains for the six-month period. Over 1H’24, the MSCI Emerging Markets TR Index increased 4.7% while the MSCI All World ex US Index increased by 5.6%. These led to a strong increase in FUM, which was $9.58bn at 31 December 2023. This is a 2% increase over the 30 June figure, but 8% over the total at the end of 1Q’24. Across the strategies there was some outperformance, notably in Opportunistic Value and Fixed Income offset by some net outflows.

  • Operations: Given market conditions, City of London Investment Group has announced some cost reductions. It has identified ca. $2.5m p.a. of reductions with the full effect in FY2025. It announced estimated profit before amortisation and taxation for 1H’24 of $13.8m, a 1% increase over last year.
  • Estimates: The increase in FUM and cost savings have led to significant upgrades to our estimates. Our 2024E EPS has increased by 6% from 40.0¢ to 42.1¢ and our 2025E EPS has increased by 11% from 41.8¢ to 46.6¢. We have left our dividend forecasts unchanged.
  • Valuation: After the recent performance, the 2024E P/E of 13.7x is a noticeable discount to the peer group. A 2024E dividend yield of 9.2% is well above the market average and should, at the very least, provide support for the shares in the current markets.
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