The Platinum Asset Management Ltd (ASX: PTM) share price is 2.59% higher to $3.56 per share at the time of writing, following the chair’s address to Platinum’s annual general meeting (AGM) on Friday.
The Platinum share price has experienced downward, whipsaw-like action in recent years, driven by disappointing earnings. Despite the consistent dividend yield from the company, the $3 share price level represents 12-year lows for Platinum.
What was shared at the Platinum AGM?
In today’s AGM address, Platinum chair Michael Cole said, “it has been a somewhat challenging year for Platinum with investment returns for our flagship International Fund overshadowing some strong investment performance in other areas, most notably our Asia ex-Japan and Healthcare focused investment strategies.”
The underperformance in its flagship fund translated into net fund outflows and lower funds under management (FUM). Platinum’s overall revenues were flat for the year and profit after tax was down only slightly, by 2% on the prior corresponding period.
FUM at 30 June 2020 was $21.4 billion, a decrease of 14% from the 30 June 2019 closing FUM of $24.8 billion. The reduction in FUM was driven primarily by net fund outflows of $3.0 billion.
Strong dividend yield to continue
The board declared a 2020 final fully franked dividend of 11 cents per share. Together with its interim fully franked ordinary dividend of 13 cents per share, Platinum’s total dividends for FY20 come to 24 cents per share. The 24 cents per share annual dividend represents a 6.4% annualised yield (based on the company’s share price at 30 June 2020).
The board noted that over the past decade, it has consistently paid shareholders over 90% of the company’s profit after tax as dividends. This is because the company’s capital requirements have been limited. In today’s announcement the Platinum board indicated it generally expects that most, if not all, future profits will continue to be distributed by way of dividends.
At 31 October 2020, Platinum’s FUM was $21.8 billion, which represents an increase of 1.9% from the 30 June 2020 FUM of $21.4 billion.
The company also highlighted that the financial markets have continued to appreciate in the first four months of the new financial year, and this appreciation has more than offset net outflows from its funds.
Platinum reports its early positioning in COVID recovery cyclical stocks has begun to be rewarded in recent weeks as equity markets start to digest the future implications of a vaccine-led economic recovery in more cyclical stocks.
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. 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 Scott Phillips.
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