The GQG Partners Inc (ASX: GQG) share price is under the spotlight after the company announced a very positive FY23 report.
GQG is a large fund manager that’s headquartered in the US.
FY23 result
Here is the full-year result for the 12 months to 31 December 2023:
- Net revenue increased 18.5% to US$517.6 million
- Net operating profit rose 15.7% to US$384.4 million
- Net profit after tax (NPAT) grew 18.7% to US$282.5 million
- Distributable earnings improved 17.4% to US$297.9 million
- Dividends per share increased 17.3% to US$0.091
Nearly all of the company’s revenue comes from management fees rather than performance fees, so funds under management (FUM) movements are a key factor.
The average FUM increased 14.7% to US$101.9 billion and the closing FUM for the year jumped 37% to US$120.6 billion. This suggests that the revenue (and profit) could grow in FY24 because it has started FY24 in such a strong position.
While investment performance certainly played its part, fund inflows have helped drive the company’s performance. It said for the 2023 full year, its net inflows were US$10 billion.
Pleasingly, each of its main strategies have outperformed their respective benchmarks over five years, including the US strategy which has beaten the S&P 500 (17% per annum versus 15.7% per annum).
Outlook for the GQG share price
The business has started 2024 strongly – in the month and a half to 14 February 2024 it has experienced US$2.9 billion of net inflows.
GQG thinks it offers very attractive fees relative to competition, with a weighted average management fee for the 12 months ended 31 December 2023 of 48.8 basis points (0.488%). GQG suggests it may be less likely to face margin pressure in the future relative to peers with higher average management fees.
Less than 4% of its revenue came from performance fees, so its earnings could be less volatile.
It’s seeing “solid business momentum” in a variety of geographies and across channels.
The company is doing very well with its financials and investment performance, but the GQG share price has risen more than 60% since the end of October 2023. The GQG share price is not as cheap as it was, that’s for sure. Considering it’s growing so well, and FY24 looks promising, I think it could still do well from here. It certainly has an appealing dividend too.
But, I’d prefer to buy it after some negative movements in the wider share market, which typically sends fund manager share prices down significantly, or at least more than other sectors.
