# City of London Investment Group: You’re so special!

- Link: https://www.directorstalkinterviews.com/city-of-london-investment-group-you%e2%80%99re-so-special/4121046634
- Published: 2022-01-24T11:11:51+00:00
- Author: Amilia Stone

**City of London Investment Group plc **(LON:CLIG) has announced its trading update
for 2Q22. The big news, for most shareholders, will be the announcement of a special
dividend of 13.5p per share. While we knew this was a possibility, we did not expect
it so soon. The interim dividend has been kept unchanged from the previous year 
at 11p per share. CLIG highlights its strong cash balance of £24.5m as of 31 December
2021, which is well in excess of both its capital and operational needs. The special
dividend will cost £6.8m and still the leave the company with a more-than-adequate
cash balance.

 * **FUM:** The CLIM strategies all outperformed mixed markets, while the International
   strategy saw good net inflows of $265m. While the other strategies saw smaller
   net outflows, the combined effect was to increase FUM by 2% from $10.9bn to $
   11.1bn.
 * **Estimates:** The net inflows and positive performance have led to small upgrades
   to our earnings estimates, with an offset from lower fee rates. Our 2022E underlying
   EPS has risen 0.2%, to 49.0p, while our 2023E underlying EPS is up 0.6%, to 51.9p.
 * **Valuation:** Despite the recent good performance, the 2022E P/E of 12.6x remains
   at a discount to the peer group. The 2023E yield of 7.1% is attractive, in our
   view, and should, at the very least, provide support for the shares in the current
   markets.
 * **Risks:** Although City of London Investment Group has reduced its relative 
   emerging markets exposure, it is still 43% of assets. It has proved to be more
   robust than some other fund managers, aided by its good performance and strong
   client servicing. Market volatility remains a risk, although increasing diversification
   is also mitigating this.
 * **Investment summary:** Having maintained good investment performance and operational
   control, City of London Investment Group is well placed to grow organically. 
   The valuation remains reasonable. After special dividends in FY19 and FY22, dividend
   increases in FY20 and FY21, and with the EPS boost from Karpus, the prospects
   for future dividend increases look very good.

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