Our opinion on the current state of CORONAT(CML)
Coronation (CML) is one of South Africa's largest asset managers and the only one listed on the JSE. Founded in 1993, the company grew successfully until 2015. At that point, the founding CEO resigned, and Adrian Pillay, a well-qualified individual, took over. However, the company has faced challenges since Pillay's appointment. Coronation was heavily invested in African Bank and Steinhoff, both of which experienced significant financial issues, leading to substantial losses. These missteps have caused the investment community to question Coronation's ability to maintain its past success in selecting strong investments on the JSE and beyond. As a result, the company has seen an outflow of institutional funds, which has negatively impacted confidence in its fund management.
In the asset management industry, confidence is crucial, particularly from institutional fund managers who must trust the judgement of asset managers. A solid track record of managing funds is essential, but even the most qualified teams will make mistakes and lose money at times.
On 8th February 2023, Coronation announced that it had lost a SARS appeal regarding additional taxes, which could potentially result in the suspension of its dividend. This news caused the share price to drop sharply. However, in its results for the six months to 31st March 2024, the company reported a 4.3% increase in revenue and headline earnings per share (HEPS) of 200.5c, compared with 6.2c in the previous period. Assets under management (AUM) also grew by 5% to R631bn. The company said, "Net outflows for the period were in line with our expectations at 4% of average AUM. This is largely due to the weak SA savings industry, to which Coronation is significantly exposed. It also reflects the experience of the broader industry, as active asset managers around the world experience persistent net outflows."
Technically, Coronation's shares rose strongly from 2008 until reaching a peak of R115 per share on 30th December 2014. After that, and under new management, the shares fell to a low of 2541c at the outbreak of COVID-19. A long-term downward trendline was applied, and a clear upside break occurred on 21st June 2024 at 3599c. The share was added to the Winning Shares List (WSL) on 11th May 2024 at 3281c and has since risen to 3900c, with indications that it will rise further.
On 21st June 2024, the Constitutional Court ruled in Coronation's favor, meaning the company is not liable for a R794m claim by SARS. The company indicated that the funds set aside for a potential adverse judgement could be returned to shareholders. Additionally, on 13th October 2024, Coronation announced its intention to increase black ownership from the current 31% to 51%, which would help it secure more business from government agencies like the Government Employees Pension Fund (GEPF).
In the asset management industry, confidence is crucial, particularly from institutional fund managers who must trust the judgement of asset managers. A solid track record of managing funds is essential, but even the most qualified teams will make mistakes and lose money at times.
On 8th February 2023, Coronation announced that it had lost a SARS appeal regarding additional taxes, which could potentially result in the suspension of its dividend. This news caused the share price to drop sharply. However, in its results for the six months to 31st March 2024, the company reported a 4.3% increase in revenue and headline earnings per share (HEPS) of 200.5c, compared with 6.2c in the previous period. Assets under management (AUM) also grew by 5% to R631bn. The company said, "Net outflows for the period were in line with our expectations at 4% of average AUM. This is largely due to the weak SA savings industry, to which Coronation is significantly exposed. It also reflects the experience of the broader industry, as active asset managers around the world experience persistent net outflows."
Technically, Coronation's shares rose strongly from 2008 until reaching a peak of R115 per share on 30th December 2014. After that, and under new management, the shares fell to a low of 2541c at the outbreak of COVID-19. A long-term downward trendline was applied, and a clear upside break occurred on 21st June 2024 at 3599c. The share was added to the Winning Shares List (WSL) on 11th May 2024 at 3281c and has since risen to 3900c, with indications that it will rise further.
On 21st June 2024, the Constitutional Court ruled in Coronation's favor, meaning the company is not liable for a R794m claim by SARS. The company indicated that the funds set aside for a potential adverse judgement could be returned to shareholders. Additionally, on 13th October 2024, Coronation announced its intention to increase black ownership from the current 31% to 51%, which would help it secure more business from government agencies like the Government Employees Pension Fund (GEPF).
Haftungsausschluss
Die Informationen und Veröffentlichungen sind nicht als Finanz-, Anlage-, Handels- oder andere Arten von Ratschlägen oder Empfehlungen gedacht, die von TradingView bereitgestellt oder gebilligt werden, und stellen diese nicht dar. Lesen Sie mehr in den Nutzungsbedingungen.