Ashmore Group (LSE:ASHM) PLC shares recovered sharply from an early sell-off on Monday as investors weighed stronger headline profits against a weaker-than-expected underlying performance.
The emerging markets asset manager initially fell to around 199p, from Friday’s 218.4p close, before rebounding to 215.8p by 8.40 am, leaving the shares down just 1.2%.
Ashmore reported a 17% increase in pre-tax profit to £126.9 million and a 28% rise in diluted earnings per share to 15.0p, helped by £82.5 million of gains from its seed capital programme. Assets under management increased 13% to US$54.0 billion, supported by US$2.7 billion of net inflows and US$3.7 billion of positive investment performance.
However, Cavendish said the underlying result was softer than market expectations.
The broker noted adjusted EBITDA of £35.7 million was around 32% below consensus, while adjusted revenue of £135.6 million was also below expectations. Performance fees of £1.4 million were a particular disappointment.
Ashmore said adjusted net revenue fell 7% year on year, largely reflecting lower performance fees, while adjusted EBITDA declined from £52.5 million to £35.7 million.
Cavendish nevertheless described the outlook as positive, pointing to improving sentiment towards emerging markets and the potential for further client allocations.
Ashmore echoed that view, saying its investment outperformance and improving appetite for emerging markets leave it well positioned to capture additional flows.
Despite the improving backdrop, Cavendish retained its Sell recommendation, arguing that the recent re-rating already reflects much of the expected improvement in emerging-market fund flows.
