FUM increased marginally over Q1 of FY24 from £16.85bn on 30 Jun 23 to £16.86bn on 30 Sep 23. As flagged in the FY23 results release of 14th Sep 23, net flows were slightly negative for the quarter at -£70m, although BM has indicated it expects positive flows for the whole of FY24.
It’s important to keep this small negative quarterly net flow number in context: it follows nine consecutive quarters of positive flows (achieved despite difficult market conditions) and a period where BM recorded a higher organic growth rate than peers for 6 out of 8 quarters.
We leave our forecasts and our fundamental valuation unchanged at 3,000p per share which, following the recent share price fall of BM (as well as the sector more generally), is now 89% above the current share price.
It is also worth zooming out to look at sector valuations in light of recent falls. Since the end of the bull market at the end of 2021, investment/wealth managers and platforms have ‘de-rated’ significantly with the median PER of a tracked peer group declining 54% from 27.6 to 12.6.
While valuations may well have ‘over-run’ to a degree at the end of the bull market, we certainly see the current median PER of 12.6 as very low (noting that this has dropped 25% in just one month from 17.0 when we published our most recent note on 14th September 2023).
