The AMP Limited (ASX: AMP) share price has had a dismal 2020. In fact, it really has had a dismal performance its whole listed life, if this share price graph is anything to go by:
AMP shares closed at $1.70 yesterday. That's not too bad considering the company's 52-week low is $1.08. But it's not great if you consider that, in the 23 years AMP has been a public company (it demutualised in 1997), its all-time low is also $1.08, whereas its all-time high is approximately $10.84, which it hit way back in 2007.
AMP's reputation as one of Australia's oldest and most trusted wealth managers took a potentially fatal hit during the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The subsequent appointment of a new CEO in Francesco de Ferrari was supposed to herald a turnaround for the company. However, AMP seemed to raise the white flag earlier this year when it declared all parts of its business open for a possible sale. The company is already sitting on a potential takeover offer of $1.85 per share from the United States-listed Ares Management Corp (NYSE: ARES). AMP's flagship life insurance business has already been offloaded. We also got the news last month that AMP is closing its range of exchange-traded fund (ETF) offerings. And that was on top of revelations of a sexual harassment scandal at the company.
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AMP's true worth?
So what are AMP shares worth today? The market tells us around $1.70 per share, which values AMP at a market capitalisation of $5.83 billion. But new reporting from the Australian Financial Review (AFR) has a different take.
The AFR reports that number crunchers at Swiss investment bank UBS Group AG (NYSE: UBS) have calculated that AMP shares could be worth as much as $2.45 (with a market cap of $8.4 billion). Before AMP shareholders get too excited though, there's a catch.
That price comes from valuing a broken up AMP. That is, if AMP is dismembered into its various parts and sold off, AMP shareholders could receive as much as $2.45 per share in cash. But the range UBS gave was actually $1.45-$2.45.
That upper range comes from an estimation that AMP's most profitable division – AMP Capital – could be worth as much as $1.31 per share. It gives the AMP Bank division a potential valuation of 37 cents a share, and its New Zealand wealth management arm 12 cents. The Australian wealth management division receives an estimated value of 74 cents a share.
With this estimation, AMP shareholders might happily accept a breakup, even if it means the dismal end of a 171-year-old institution.
