Peel Hunt has upgraded its forecasts for AIM-quoted investment manager Premier Miton (LON: PMI). The dividend yield is particularly attractive.
There was a 24% decline in assets under management to £10.6bn in the year to September 2022. Since then, the assets under management have recovered to £11.3bn thanks to net positive inflows since September. Peel Hunt expects that level of assets under management by September 2023.
In the year to September 2022, revenues were £90.2m and pre-tax profit was £14.4m. The tough markets mean that revenues are expected to decline to £76.7m this year, while pre-tax profit would drop to £14.4m.
The higher than expected level of assets under management has prompted Peel Hunt to upgraded earnings per share by 2% for this year and 12% for 2023-24.
The unchanged 10p a share dividend is 72% covered by earnings, but the target is to pay between 50% and 65% of earnings. This year the dividend is unlikely to be covered. That is likely to limit the short-term upside with earnings unlikely to grow be enough over the next two or three years to get back to the target payout ratio.
There could even be a reduction in the dividend, but Premier Miton management is keen to keep a significant dividend payment.
At 104.5p, the prospective multiple is just over 14 and the yield is 9.6%.