r21442
22 Mar 2018
Tip of the week again in IC 23-Mar-18 Brewin Dolphin (BRW) has spent recent years honing its focus on higher-margin discretionary wealth management, exiting non-core businesses and overhauling its back office. The wealth manager’s efforts are paying off, with organic asset growth accelerating and pre-tax profit margins hitting management’s 25 per cent target during the final quarter of last year. Yet the shares trade at a discount to their peers and also offer a forecast yield well north of 5 per cent.Shifting its business towards fee-based discretionary wealth management work and away from commission-charging advisory business has helped attract new funds. Last year it gained record net discretionary inflows – including transfers – of £2.3bn, equivalent to 8 per cent organic growth. That meant it exceeded its target of increasing assets by 5 per cent organically. That’s in contrast to peer Rathbone Brothers (RAT), which has the same target but only achieved 3 per cent growth. Taken together with market returns, Brewin managed to grow its discretionary funds by 15 per cent to almost £34bn. That meant it handsomely outperformed the MSCI WMA Private Investor Balanced Index, which was up just 6 per cent during the same period.The company has got off to a good start this financial year, too, adding £0.7bn in discretionary flows, once again equivalent to 8 per cent organic growth. Part of the way the wealth manager has managed to exceed its targets is by building its intermediary relationships, which is slightly lower-margin work. That’s been helped by the launch of its white-label Managed Portfolio Service (MPS), used by intermediaries outsourcing the management of their clients’ money, a practice that’s become more prevalent following the introduction of the retail distribution review (RDR) regulation. the end of September 2017, MPS had £2.3bn in assets under management, up from just £0.6bn two years prior. That boosted assets from intermediaries to £10.4bn last year, or almost a third of total discretionary funds. This is up from 24 per cent in 2015.Analysts at Shore Capital forecast 6.5 per cent organic discretionary asset growth this year and closing assets under management of £44bn. However, it has moderated its forecast for revenue yields slightly from 0.81 per cent to 0.795 per cent, as a greater proportion of business is expected to come via intermediaries, where Brewin gains less of a margin than it does from the direct-to-customer channel.The benefit of discretionary funds is that they attract more stable fee income and are less dependent on transaction volume. Core fee income represented 71 per cent of overall core income last year, up from 68 per cent in 2016. That is just as well because lower market volatility has meant a reduction in transaction income across the wealth management sector during the past year. Brewin has also been gradually growing its financial planning business, with sales up almost a fifth last year to £21m, or 7 per cent of the group total. And it is stepping up activities in the advice market. The growth in ‘robo-advice’ products has been lauded by some as a threat to traditional wealth managers. While this is debatable, given the higher portfolio size typically managed by groups such as Brewin, the group is hedging against the risk. Last year it launched wealth planning and investment advice provider WealthPilot, a lower cost, simplified version of its core service, aimed at a broader audience. At the other end of the spectrum, it is developing a product for clients with more sophisticated wealth planning needs.Shares in Brewin Dolphin are trading at just 13 times 2019 forecast earnings. That’s a discount to peers including Brooks Macdonald (BRK) at 15 times, Mattioli Woods (MTW) at 19 times and Rathbone Brothers at 17 times. That’s previously been justified by its less mature discretionary business. However, with organic growth and margins hitting management’s targets, not to mention a forecast
r21442
30 Nov 2017
Tip update in tomorrow's IC Tip Update: Buy at 351.7pTip styleGROWTHRisk ratingMEDIUMTimescaleLONG TERMTwo years after implementing its strategic plan, Brewin Dolphin (BRW) is in a growth phase, says chief executive David Nicol. Its efforts consolidating its offices and focusing on higher-margin discretionary wealth management work have paid off. It gained record net discretionary fund inflows – including transfers – of £2.3bn during the year to September, taking the total under management to £33.8bn. That put the wealth manager on track to meet its target to increase discretionary funds by one-third via net new business alone by 2020.Overall funds under management rose by 13 per cent to £40.1bn. That compared with a 6 per cent increase in the MSCI WMA Private Investor Balanced Index. Growth in the proportion of discretionary funds meant core fee income was up 16 per cent to £208m, while commission income continued to decline.Management broadened its direct client product range, launching wealth planning and investment advice provider WealthPilot. The product is a lower cost, simplified version of its core service, aimed at a broader audience. On the other end of the spectrum, it is also looking to develop a product for clients with more sophisticated wealth planning needs. On the intermediary side – which accounted for 90 per cent of net new fund growth – a passive version of its Managed Portfolio Service platform was introduced.Analysts at Cantor Fitzgerald expect adjusted pre-tax profits of £80m for the year to September 2018, giving EPS of 22.3p (from £70m and 19.6p in 2017).The shares are up on our buy tip (331p, 22 June 2017) and trade at 16 times forward earnings. That’s a discount to the sector average. With the restructure over, we believe there is further upside to come. Buy.
r21442
27 Jul 2017
Peel Hunt Peel Hunt has maintained its ‘buy’ rating on Brewin Dolphin (BRW), pointing to continuing strong fund inflows to the wealth manager and a low valuation.Brewin Dolphin yesterday reported a 3.7% jump in assets, with record revenues of £77.3 million for the three months to the end of June.‘Brewin Dolphin’s update highlights the continuing momentum in net business, with positive flows from intermediaries and into the managed portfolio service,’ said analyst Stuart Duncan.‘Brewin is moving to the next phase in its development – focusing on delivering improving levels of organic growth, in addition to considering further corporate activity to complement the recently acquired Duncan Lawrie [investment] business,’ he added.‘The valuation multiple now stands at 11.1 times 2017 profits, which remains at a material discount to others in the sector.’Duncan maintained his 390p target price on the shares, which rose 1% to 354.6p yesterday.
albent
05 Apr 2015
Established income payer with solid financial health and growth potential. Infographic for Brewin Dolphin Holdings (LSE:BRW): [link]
taffytiddler
24 Nov 2014
£915k Hhmmm. Somebody is confident of next weeks finals. Either that or a had good pub lunch?TT
