Coronation Fund Managers has produced another firm set of results, after strong investment gains bolstered its returns in the 6 month period ended 31 March 2014. Keeping its title as the darling of investment funds, Coronation’s share price has increased by 70% in the last year. Are these incredible returns sustainable going forward, or is prudence advisable when valuing Coronation’s future returns?
Highlights:
- Assets under management of R547 billion
- Diluted headline earnings per share of 274.5 cents
- Interim dividend per share of 275 cents
Coronation Fund Managers saw continued good investment performance and a further increased asset base led to a 56% rise in revenue to R2 308 million for the six-month period. This resulted in an increase in diluted headline earnings per share of 69% to 275.4 cents (March 2013: 163.4 cents). Profit from fund management grew by 67% to R1 291 million (March 2013: 774 million).
The fund has benefited from the continued strength in equity markets and strong inflows. While developed markets continued to outperform emerging markets (9.6% for the MSCI World Index versus 1.5% for the MSCI Emerging Markets Index, both in US dollar terms), the South African equity market delivered a US dollar return of 4.7% (10.1% in rand terms). The rand remained one of the worst performing emerging market currencies, losing 4.8% against the US dollar and 6.6% against the euro to close at R10.54 and R14.51 respectively.
Coronation has said that, “The past six months mark yet another exceptional period for the business and for our clients. While equity markets have continued to be strong, the absolute levels of return are not sustainable and we caution investors to re-set their expectations for the years ahead. Coronation is a cyclical business and we envisage a difficult investment environment with increased market volatility. Going forward our focus remains fixed on creating long-term value for all our stakeholders.”
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