Numis cuts Aberdeen Asset Management to 'hold' from 'add'

In the six months to the end of March, underlying pre-tax profit fell 40% to £162.9m, as net revenue declined 20% to £483.6m.

Assets under management dropped to £292.8bn from £330.6bn the year before, and the company kept its interim dividend per share unchanged at 7.5p.

Numis said it was “an all-round bad set of results”, with AUM 2% lower than expected.

On Aberdeen’s £70m cost saving programme, Numis said: “Whilst significant vs. run rate costs of around £655m and earnings before interest and tax around £310m, it is unclear how much of this is real cost take out versus expected variable cost reduction on lower revenues and versus previously announced cost saving initiatives.

“The only positive we could take away from these results is that it appears that emerging market related flows improved or got no worse than prior quarters. We downgrade our recommendation from 'add' to 'hold' reflecting these weak results and further significant re-rating.”

Numis said in the short-term the group remains very much exposed to emerging markets so the broker would prefer to wait for a more attractive entry point.

In the long term, Numis believes Aberdeen can achieve growth in other areas and can make further cost-cutting motivated acquisitions. The analyst left the target price at 295p.

Shares fell 7.87% to 275.20p at 1006 BST.