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Pengana Capital Group (ASX:PCG) announced HY 2019 results today (22 February 2019). The diversified funds management group reported an underlying net profit after tax of $4.2 million vs. $7.9 million in December 2017, a drop of 46.83% on a comparable year basis. The management attributed the decline in underlying net profit after tax to the reduction in performance fee revenue, which is down 68% from the prior comparable period. The shares of PCG were under pressure during the trading hours and fell by 6.522% to close the trading day at $A 2.15.
HY 2019 Results Highlights:
- Statutory profit of $0.9 million.
- Underlying profit of $4.2 million.
- Underlying earnings per share of 4.0 cents per share.
- An interim unfranked dividend of 4.0 cents per share.
CEO, Russel Pillemer in his letter to the shareholders, commented on the overall operations of the company for HY 2019. Funds Under Management (FUM) at $3,319 million represents a fall of 14% in comparison to HY 2018 FUM of $3,012 million. The decline in FUM was attributed to the underperformance of the firmâs two largest strategies â Australian multi-caps and Australian small-caps.
The company managed to show a 3.3% growth in Management fees which came at $19.4 million vs.$18.7 million in HY 2018. However, this growth in Management fees did not help with its Total fee margin, which came at 1.38% well below its historical 5-year average of 2%.
The CEOâs letter also highlighted that the operating expenses were up 11% on a comparable period basis, primarily due to high marketing and sales expenditure. Pengana Capital Group, during this reporting period, closed out a loss-making unit in Singapore.
The balance sheet remained strong with no borrowings and net liquid assets on the books at $17 million is above regulatory requirements of $9 million.
The outlook:
Mr.Pillemer in his letter drew attention to the companyâs decision to increase investment in distribution, with the focus on the growth of their existing strategies and broadening the Pengana product offer range. The company is preparing for the Initial Public Offering of Pengana Private Equity Trust, and the company has lodged the product disclosure statement with the regulator ASIC. The IPO is set to open on 26th February 2019 and close on 10th April 2019.
The Trust is upbeat about the global private equity market as an asset class. Also, the trust seeks to generate a good return and capital growth and target a 4% annual distribution yield.
The shareholders of PCG will get priority offer, and the details of the same will be made available in the Trustâs PDS.
Stock Information:
Pengana Capital Groupâs (ASX:PCG) market capitalization stands at $237.54 million. The Stock price was noted as A$2.150 (as at 22 February 2019 closing price) with the 52-week low price of A$2.050 and the 52-week high price of A$3.750. The company reflects PE ratio of 25.900x, EPS of 0.089 AUD and Dividend yield of 5.65%.
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