Will Active Management Approach Change The Fortune For Polar Capital Holdings Plc Stock in Future (POLR)?

  • Feb 26, 2019 GMT
  • Team Kalkine
Will Active Management Approach Change The Fortune For Polar Capital Holdings Plc Stock in Future (POLR)?

Overview

Polar Capital Holdings PlC (POLR) was incorporated in the year 2000 and located in London, United Kingdom. The company provides research-driven investment management services, authorised and regulated by the UK Financial Conduct Authority. It offers high entrepreneurial services for portfolio managers and institutional investors. It provides a structure that offers a level of administrative, marketing and operational supports usually founded in the large organisations. The company is registered as an investment adviser with the US SEC. 

Key Management Team

Financial Results and Review - 1H FY2019 (£, Thousands)

(Source: Half Yearly Report, Company Website)

 

Financial Commentary – H1 FY2019

  • The company’s reported gross income of £74,972 thousand for the half year ending September 2018 as compared to £46,841 thousand in 2017 for the same period. There is an increase of 60.1 per cent in revenue of the company due to an increase in Investment management, performance and research fees as compared to last year.
  • Operating costs had increased from £32,001 thousand in H1 FY2018 to £41,606 thousand in H1 FY2019 mainly due to an increase in the staff costs.
  • The company’s profit before tax was also increased to £27,323 thousand in H1 FY2019 as compared to £11,754 thousand in H1 FY2018.
  • The company’s profit attributable to shareholders was £21,993 thousand in H1 FY2019 as compared to £9,147 thousand in H1 FY2018. The company’s increased revenue indicates a surge in shareholders returns with enhanced profitability.
  • Adjusted basic Earnings per share had increased to 24.1 pence in H1 FY2019 (H1 FY2018: 12.5 pence) while basic EPS was 24.3 pence for H1 FY2019.

Ratios

(Source: Thomson Reuters)

 

Ratios Commentary

  • Gross margin reported was 91.90 per cent in the first half of the financial year 2019, reflecting a decrease of 1.5 per cent when compared with last year data.
  • EBITDA margin of 36.70 per cent for the first half of the financial year 2019 stood the same as the industry median of 36.70 per cent.
  • Return on equity stood at 25.60 per cent which was higher than the industry median of 8.2 per cent.
  • At liquidity front, Polar Capital Holdings PLC liquidity position was higher than the industry median of 1.89.
  • On leverage front, the debt-equity ratio was significantly lower as compared to the industry median, reflecting the company is less levered as compared to its peers.

Share Price Commentary

  • On 25th February 2019, Polar Capital Holdings PLC stock closed at GBp 496, down by 2.75 per cent against its previous day closing price.
  • Stock’s 52 weeks High and Low is GBp 738.00/GBp 447.00. At the closing price, the share was trading 32.79 per cent lower than its 52w High and 10.96 per cent higher than its 52w low.
  • From the previous three months, Polar Capital Holdings PLC share price declined by 0.40 per cent, and in the last one year, the stock decreased by 0.80 per cent.
  • Stock’s average traded volume for 5 days was 52,418.40; 30 days - 75,326.03 and 90 days - 55,038.44. The average traded volume for 5 days was down by 30.41 per cent as compared to 30 days average traded volume.
  • On the valuation front, the stock was trading at a trailing twelve months PE multiple of 10.8x as compared to the industry median of 12.0x.
  • The company’s stock beta was 0.53, reflecting relatively lower volatility as compared to the benchmark index.
  • Total outstanding market capitalisation was around £467.73 million and a dividend yield of 6.05 per cent.

Growth Prospects and Risks Assessments

  • The company had implemented an active, bottom-up fund strategy which helped to gain global markets exposure and is positioned to take advantage of valuation anomalies that arise in sound quality, publicly-traded companies. Pola
  • The company had remained focused on true active fund management, producing value for money outcomes for clients by beating benchmark and peer group performance.
  • Impacted by Brexit, there are large valuation dispersions between regions in the UK and Europe.
  • There had been significant market sell-off in the emerging markets due to strengthening US dollar, fears of escalating trade wars and slowing consumption in China.

Conclusion

While broad-based challenges can be seen ahead of the group with the stock movement towards 52-week low, the company’s peer group performance seems positive with support coming from few growth drivers like increased revenue, active approach to all global markets to take advantage of valuation anomalies and beating benchmark. The markets can keep a watch on Polar Capital Holdings stock going ahead.

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