FUM closed FY23 (30 Jun 23) on £16.8bn, 7.5% up y-o-y (30 Jun 22: £15.7bn). This was the second-highest growth rate among adviser-channel-focused wealth management peers. Net flows totalled +£817m (FY22: +£785m), investment performance added +£363m, 2.3% of opening FUM, above the benchmark MSCI PIMFA balanced index which returned 1.6%. BM has flagged a healthy pipeline for FY24, although investor sentiment is still subdued.
We forecast FUM, revenue and underlying PBT growth of 10%, 2%, and 3% respectively for FY24 (down slightly from our previous forecasts) with BM expecting net flows to be muted but positive in FY24, while it continues to target organic net flows of 8-10% p.a. of FUM over the medium term (it has been attracting assets faster than competitors for some time now, evidence of a competitive, if not superior offering).
We remind readers that BM is in a huge market: c£1.2trn of UK household investable wealth is administered by advisory businesses. This market is subject to significant tailwinds, and advisers are increasingly outsourcing investment management to companies such as BM. BM also has a huge opportunity to grow its international business in the Channel Islands and Isle of Man.
Our fundamental valuation reduces from 3,100p to 3,000p per share, still 55% above the current share price. We also see potential for a sector re-rating (median PE of 17 versus 30 in late-2021) and for BM to command a premium rating given its outperformance compared to peers.
