# City of London Investment Group 1Q update confirms growth

- Link: https://www.directorstalkinterviews.com/city-london-investment-group-1q-update-confirms-growth/412737745
- Published: 2017-10-09T07:58:28+01:00
- Author: Giles Arbor

The 1Q trading update from **City of London Investment Group Plc** (LON:CLIG), a
leading specialist asset management group focused on emerging markets and closed-
end funds, reveals:

 * 1Q rise of 6% in Fund under Management to US$5.0bn (£3.7 billion) compared with
   the MSCI EM T/R Index which rose by 8% and the MSCI World T/R index which rose
   5% over the same period;
 * Rebalancing has result in “some redemption requests but, by way of offset, [CLIG]
   has a robust pipeline of potential business”;
 * Management estimates the 1Q18 post-tax profit will be approximately £2.5m (1Q17
   was £2.3m including a £0.2m unrealised profit on seed investment).

Commentary on current operations provides the following guidance: “The Group’s income
currently accrues at a weighted average rate of approximately 84 basis points of
FuM, net of third party commissions. “Fixed” costs are c. £1.0 million per month,
and accordingly the current run-rate for operating profit, before profit-share of
30% and an estimated EIP charge of 2%, is approximately £1.6 million per month based
upon current FuM and a US$/£ exchange rate of US$1.34 to £1 as at 30th September
2017.”

The statement reminds investors that the final DPS of 17p is “subject to approval
at the AGM on 23 October” and “The Group will be hosting an investor afternoon at
the London Stock Exchange on 23rd October 2017 from 2pm for investors, analysts 
and any other interested parties”.

**Zeus view**

With 1Q profit after tax of approximately £2.5m, we feel comfortable forecasting
FY18e PAT of £9.9m. We leave our forecast profit, EPS and DPS for FY18e and FY19e
unchanged.

**Valuation**

CLIG shares at 430p are cum 17p final DPS (_4.0% yield on the final dividend alone_).
On 12 October, when the shares go ex this 17p dividend, the prospective yield should
rise to over 6.5% and the FY18e PER falls to 10.6x.

Over the past year CLIG shares have generated a total return of 18.7%: this is 5.9%
above the FT All Share, and 0.5% above MXEF-£.

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