simoan wrote:I agree but need a bit more than hope to invest! If the company felt this was price sensitive and accretive to profits they would have to RNS it and they didn't. I opened a position in Schroders last week based on fundamentals, not this news
All the best, Si
This is the next step to creating a standalone business WITHOUT a Chinese partner (*). I'm surprised that they didn't release a RNS regarding the Joint Venture news and have been in touch with Investor Relations to that effect. They were non committal and merely offered to add me to their news distribution address list. Surely they (SDR) are venturing into China to make money - perhaps they are being prudent regarding profitability or perhaps it is just too early?
In November last year (**) I was wondering whether Schroders had finally received approval to operate independently in China as several months (from March to November 2021) had passed. I've not seen an update (not saying there isn't one).
I've held shares in SDRC since early 2018, coming up to 4 years and "topped up" very recently. Attractions for me being
- margins (gross 80%, operating 20%)
- no debt
- Calculations of DCF indicate an undervaluation
- a respectable yield (not too big, not too small)
- no "Covid cuts" to the dividend
- no share dilutions (10 yr period)
- looking to expand into Asia as a response to a desire to grow.
- no reported PDMR sales of shares
Downside
- they are a bit slow off the block compared to much bigger resourced Blackrock (and another company) getting into China.
- revenues are stalling in the last 5 yrs
- ROE dropping from a steadyish 17% (7 years) to ~13% in the last 3 years.
- PER @ 16 is higher than industry average (but that might reflect the relative perception compared to other asset managers)
- ROCE <4% (is this measure applicable?)
- no reported PDMR buying of shares
At the moment though, I would suggest (views solicited) that SDR are marking time. The earnings growth forecasts over the next 3 years are positive but not "strong" (~7% per annum). The stalled dividend growth is a concern (***)
(*) I refer back to news in The Times March 5th 2021. "Schroders is set to expand more aggressively in China by becoming the first British fund manager to operate there without a local partner. It already has a joint venture with the Bank of Communications in China, but now it plans to open a standalone entirely Schroders-owned business in the country."
(**)
viewtopic.php?p=455063#p455063(***)
https://www.dividenddata.co.uk/dividend ... y?epic=SDR