Treasury Group
Today’s interim result from Treasury Group goes some way to justifying its portfolio approach to the fund management business, but raises other concerns.
Although the implosion we feared at Orion Asset Management appears to be gathering pace, with funds under management (FUM) dropping from almost $5bn to around $3.5bn, this was more than offset by FUM rises of about $1bn at each of RARE Infrastructure and Investors Mutual, to about $5.6bn and $3.4bn respectively.
Total FUM rose 8% in the period to $17.0 billion and underlying profit after tax increased 7%. The interim dividend was raised 21% to 17 cents, fully franked (ex date 28 February).
Our main gripe was the apparently selective disclosure, or at least the selected emphasis. Much detail is provided about the fund inflows and margin improvement at RARE and Investors Mutual, but Orion, by contrast, seems to be have been swept under the proverbial carpet. In the circumstances, more rather than less about Orion might have been appropriate. The commentary also appears to flit between changes in FUM and fund flows as suits best.
It doesn’t provide a lot of confidence, but for the time being the market’s rising tide is lifting all fund managers (well, except Orion).
The market liked the result, sending the stock up about 4% today. That puts it up 45% since 23 Aug 12 (Hold – $4.30) and there’s enough good news to overcome our concerns about the commentary. We’re nudging up our price guides and sticking with HOLD.