Sunday share tips: Premier Asset Management, Everyman Media Group
In her ‘Inside the City’ column for the Sunday Times, Emma Dunkley was looking at fund managers - something of a particular focus for many given the ongoing anxiety around Neil Woodford and his flagship equity income fund.
Everyman Media Group
58.00p
16:55 22/04/24
Financial Services
14,392.56
11:59 23/04/24
FTSE AIM 100
3,640.52
12:00 23/04/24
FTSE AIM All-Share
753.69
12:00 23/04/24
Premier Miton Group
63.50p
11:29 23/04/24
Travel & Leisure
7,719.94
12:00 23/04/24
Woodford closed the doors on the fund after a series of poor calls several weeks ago, leaving thousands of investors’ cash trapped inside.
The situation led to the Bank of England warning last week that it could clamp down on open-ended funds, making things potentially more difficult for managers amid an already tough market, saturated with cheap index trackers.
Dunkley wrote that AIM-traded Premier Asset Management was not immune, either, with the company reporting a fall in assets under management in its quarterly report last week, as the board blamed record low inflows.
The company’s focus was multi-asset funds, investing in bonds, commodities and property as well as stocks, in a bid to help soften the landing in case of a fall in equity markets.
Its products were popular with financial advisers, Dunkley said, with that sector accounting for the majority of its sales.
According to analysts at Liberum, that approach should continue to show “structural growth”.
But chief executive Mike O’Shea said last week that conditions would continue to be “challenging”, with the firm suffering net outflows of £55m in the three months ended 30 June, compared with inflows of £202m a year earlier.
The company’s assets slipped to £6.7bn from £6.8bn, and analysts at Numis Securities had noted that investment performance at Premier had been “deteriorating” in recent times.
Fees were coming under the microscope, too, with the Premier Optimum Income fund costing more than 1% in annual charges with 2.5% trading charge levied on top, which Dunkley described as “hardly palatable” given passive fund feed could be as low as 0.1% per year.
Making matters worse, the Optimum fund had returned 24% in the last five years, significantly underperforming the FTSE All-Share, which rose 36% in the same period.
“Premier’s shares are wallowing at 189p, valuing it at £200m, down almost a third in a year,” Dunkley wrote.
“Analysts say inflows should recover, especially when there is more clarity on Brexit.
“However, with active managers out of favour and regulators preparing a crackdown, it is hard to see light at the end of the tunnel. Sell.”
Over in the Mail on Sunday, Joanne Hart used the upcoming release of a remade The Lion King to suggest that times were good not just for the film industry, but also for firms like Everyman Media Group, which operates a chain of boutique cinemas.
Hart said in her ‘Midas’ column that Everyman was doing well, with expectations that it could double in size in the next five years, even though its shares had been “held back”, falling to 171p now from 230p last autumn.
The company’s cinemas were different from the typical multiplexes, with its theatres housing around 250 customers, featuring a maximum of four screens.
Its focus on making a night at the cinema more of an event meant its locations also boasted comfortable seats and sofas, with real food being served on plates and drinks - even wine and cocktails - coming in glasses.
Everyman was founded in 1999, when a group of investors took on the original Everyman cinema in Hampstead, transforming that location before steadily expanding and floating on AIM in 2013.
Chief executive Crispin Lilly was brought in a year later, at a time when the company had 10 locations, helping to grow the chain to its current count of 28 theatres.
Looking ahead, Lilly was showing no signs of pumping the brakes, with the company looking to take the number to 50 cinemas by 2022 and expanding overseas.
The company was targeting a different audience to the typical multiplex as well, with its clientele typically being aged from their mid-20s and upwards, and prepared to pay a premium for a more pleasant experience.
Looking at the numbers, Everyman’s results for the year ended 3 January 2019 showed a 28% improvement in turnover to £52m, and a 69% rise in pre-tax profit to £2.7m.
Brokers were picking a 28% rise in turnover to £67m and a 33% increase in profits to £3.6m in the current year.
And while Everyman could boast just a 2.5% share of the UK cinema market, it was working to grow that number at the same time as the wider market was experiencing solid growth.
Total cinema admissions reached 177 million last year - the highest figure since 1970 - with this year’s total expected to increase further, as Hollywood continues to churn out blockbusters.
“Everyman shares have fallen in recent months, reflecting fears about the impact of an economic slowdown on audience figures, as well as competition from Netflix and its like,” Joanne Hart wrote.
“Time and again, however, history shows that, when conditions worsen, cinema attendance rises – and that people continue to enjoy the social experience of going to the flicks.
“Lilly is optimistic, the group is expanding and long-term shareholders include blue-chip investors Killik, Schroders and Hargreave Hale. At £1.71, the shares are a buy.”