BT Investment Management Ltd shares pop on record result: Is it a buy?

BT Investment Management Ltd (ASX:BTT) delivers another record profit result and boosts its dividend.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of BT Investment Management Ltd (ASX: BTT), or BTIM, have spiked around 5% today after the fund manager delivered its fourth consecutive record full-year result.

The improved result was achieved despite tougher market conditions, with the main highlights as follows:

  • Average funds under management (FUM) up 7% to $80.2 billion
  • Fee revenue increased by 13% to $493.9 million
  • Particularly strong growth in performance fees, up 49% to $77.2 million
  • Operating expenses up 11% to $297 million
  • Operating profit margin up 3% to 40%
  • Statutory net profit after tax (NPAT) up 12% to $142 million
  • Cash NPAT up 18% to $156 million
  • Cash earnings per share up 15% to 50.8 cents per share
  • Final dividend of 24 cents per share, bringing the full year dividend to 42 cents per share – an increase of 14% from last year.

Overall, this was another fairly strong result that continues to build on the positive earnings momentum from recent years.

One of the most pleasing aspects of the latest result has been the continued growth in average FUM and the accompanying increase in base fee revenue, as highlighted below.

Source: Company Presentation
Source: Company Presentation

This is especially encouraging when you consider the fund manager was directly exposed to the volatility created from Brexit through its UK-based JOHCM division.

As highlighted by the chart below, fund inflows into this division are now recovering strongly after the period of uncertainty.

Source: Company Presentation
Source: Company Presentation

Impressively, at the end of the September reporting period, total FUM was sitting at a record high level of $84 billion.

Pleasingly for shareholders, the fund manager has now repaid all of its outstanding debts while still managing to increase its dividend for the fifth straight year. BTIM now has a net cash balance of $174.2 million, an increase of 17% over last year.

Outlook

BTIM hasn't provided any specific earnings guidance for FY17 but the fund manager has started the new financial year off strongly with record FUM and inflows of $2 billion already funded.

Valuation

At the current share price of $9.50, the shares currently trade on a price-to-earnings ratio of 18 and provide investors with a trailing dividend yield of 4.4% (partially franked).

Is it a buy?

As a current shareholder, I am pleased with today's result but I don't think the shares are a screaming buy just yet.

The fund manager looks like it will have to grapple with a number of headwinds during FY17 including a potentially stronger Australian dollar and global equity markets that continue to lack any real direction.

With that said, I'm more than happy to hold on to my shares at current prices and would be a keen buyer below $8.50 per share.

Motley Fool contributor Christopher Georges owns shares of BT Investment Management Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »