Broker snap: Ashmore's FUM exceed forecasts

14th Apr 2011 12:05

While Ashmore Group's funds under management (FUM) in the third quarter were ahead of RBS's expectations, the broker keeps its 'hold' rating but says the results justify the stock's premium rating to the sector.The emerging markets asset manager reported FUM of $50.3bn, 3.5% ahead of the broker's $48.6bn forecast, while fund flows of $2.3bn exceeded estimates of $3.1bn.The broker sees the following as the key positives of the Ashmore investment case: 1) improving investing performance (with 80% of funds outperforming their benchmark over one year); 2) the company has exhibited excellent cash flow generation; 3) leverage to interest rates given net cash position; and 4) chief executive Mark Coombs retains a 43% stake, "ensuring senior management's interests align with those of shareholders."However, with revenue margins to decline and recent performance fees unlikely to be repeated - driving operating margins down - the broker stays cautious with a 'hold'. The target price is kept at 365p. ---bc