Racing ahead of forecasts: our fair value rises

AUM closed FY21 on £9.0bn (+35% y-o-y from £6.7bn) with Tatton reaching this milestone a year ahead of our previous forecasts. A strong investment performance was the largest contributor to AUM growth (+£1.5bn), but the inflow of new client money was also strong (+£0.8bn) and accelerating, with average monthly inflows in H2 of £71m compared to £55m in H1. Net cash increased 32% from £12.8m to £16.9m, also well ahead of our forecast (£16.4m).

Tatton’s longer term growth trajectory remains firmly in place, and we think it is realistic that AUM reaches £15bn by 2025 through organic growth. Our fundamental valuation increases to 395p and we flag that Tatton’s PER of 25.4 is undemanding compared to peers (median 27.3), despite it being a top quartile performer when it comes to attracting net AUM inflows.

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