This report is an updated version of the report published on 30 May 2022 at 08:56 AM GMT+1.

St James’s Place PLC (LON: STJ)

St James’s Place PLC (LON: STJ) is an FTSE 100 index listed entity that offers wealth management and investment funds management services. It provides products and services through branch offices, wealth advisors, and online portals to high-net-worth individuals, wealthy families, and corporates in the UK and Asian region.

On 28 July 2022, the Company expects to release H1 FY22 results.

Recent trend of Dividend Payments

STJ has a progressive dividend policy and paid a final dividend of 40.41 pence per share on 27 May 2022, while the ex-dividend date was 28 April 2022. It has taken the full-year FY21 dividend to 51.96 pence per share. In comparison, the Company had paid a total dividend of 38.49 pence per share for the prior year.

(Source: LSE website; Analysis done by Kalkine Group)

Growth Prospects

• Increased Clients Management: The Company has provided a best-in-class customer relationship management system by rolling out the Salesforce across the Partnership during FY21. Meanwhile, STJ is also making a significant investment in the Bluedoor platform to continue to drive better administration standards, accuracy, and efficiency across the business.
• Continued Financial Strength: The prospect for the Company’s future businesses, SJP Asia and Rowan Dartington, remained bright as it remained on track to achieve the financial outcomes set out in the 2025 business plan.
  

Key Risks 

• Record UK Inflation: The rise in regulated household energy bills led to UK inflation leaping to 9% in April 2022, the highest level since 1982. It may adversely impact UK equities.
• Market Volatility: The volatility in the financial markets can negatively impact the solvency, capital, and liquidity position of the Company.
• Bank of England Warning: The Bank of England had trimmed its economic growth forecast for 2023 and is expected to show a contraction of 0.25% from a previously estimated growth of 1.25%. Moreover, it had also warned of UK inflation reaching around 10% very soon.

Key Fundamental and Shareholders Statistics of St James’s Place PLC.

BlackRock Institutional Trust Company, N.A. is the most significant shareholder as it holds nearly 39.50 million shares.

Q1 FY22 Funds under Management Update (for the three months ended 31 March 2022, as of 28 April 2022)

(Source: Company Website)

• Funds Under Management: The Group had declared closing funds under management of £151.25 billion during Q1 FY22, compared to £135.46 billion in Q1 FY21.
• Net Asset Value Per Share: The Company had reported net asset value of approximately £16.35 per share on the European Embedded Value basis as of 31 March 2022. 

Share Price Performance Analysis

(Source: Refinitiv, Research done by Kalkine Group)

On 27 May 2022, STJ’s shares were closed at GBX 1,267.50, up by around 1.00% from the previous day closing price. Stock 52-week High and Low were GBX 1,742.50 and GBX 1,156.50, respectively.

On a daily chart, the stock price is hovering above the 20-days exponential moving average of GBX 1,256.91. Hence, there could be an uptick in the stock price in the near term. Also, the 14-days RSI stood at ~49.37.

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Business Outlook

STJ had managed to carry the momentum developed during 2021 in Q1 FY22 as well. The Company had made accelerated progress on four key assumptions that underpinned the 2025 business plan. Furthermore, STJ has achieved funds under management of £154.0 billion as of 31 December 2021, approaching the £200 billion target by the end of 2025. The 27% gross inflows growth during FY21 remained significantly ahead of the compound growth target of 10% per annum. In a nutshell, STJ remained optimistic about the new business growth in 2022 and confident of delivering on the broader ambitions related to the 2025 plan.

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the robust FY21 financial performance, strong guidance, decent dividend growth, and support from the valuation as done using the above method, we have given a “Buy” recommendation on St James’s Place PLC at the closing market price of GBX 1,267.50 (as of 27 May 2022), with lower-double digit upside potential based on 19.68x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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