LONDON (ShareCast) - (Sharecast News) - Analysts at JP Morgan kicked off coverage of South Africa-based asset manager Ninety One with a 'neutral' recommendation and 170.0p December 2020 target price.
Short-term headwinds offset the long-term growth potential, they said in a research note sent to clients.

Nonetheless, the shift in South Africa towards trusts and strong offshore offering would support growth, they argued.

On the back of recent "market events and ongoing uncertainty", JP Morgan was anticipating "broadly stable" adjusted profits for the 2020 financial year ending on 31 March and a 12% decline in FY 2021.

It also forecast a 50% payout ratio for FY 2020, followed by 70% in the subsequent two years, while highlighting its bias towards emerging markets, what with 57% of assets under management directed towards the space via its investment strategy.

The investment bank also highlighted the flexibility that the company had in terms of its balance sheet and the optionality that it offered.

In terms of valuation, the shares, which listed in mid-March, were trading on a price-to-earnings multiple of about 12.0 for FY 2020, versus its European asset management peers which were on a P/E multiple of 13 and sported an estimated 5% 2021 dividend yield.

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