UK share markets moved lower on Thursday as concerns over interest rate hikes gathered pace. The FTSE 100 and FTSE 250 are down around 0.5% after the US Federal Reserve signalled earlier-than-expected rate rises. The Record (LSE: REC) share price has fared even worse however, following the release of full-year financials.
The currency and derivatives manager has struggled for momentum after closing at its most expensive for more than a decade in early May, at 95p per share. And a chilly reception to today’s trading statement has sent the Record share price to 86.5p per share, down 6% on the day.
It’s worth remembering though that Record is still up around 140% over the past 12 months. Does this represent a great dip buying opportunity for UK share investors like me?
Record records record AUME
Record’s share price has slipped after the business announced a meaty fall in full-year profits. For the 12 months to March, profit before tax clocked in at £6.2m. This was down 20% year-on-year.
The company’s revenues dropped fractionally in financial 2021, to £25.4m from £25.6m previously. Management fees increased 8% year-on-year to £24.9m. But gains here were more or less wiped out by a sharp drop in performance fees. For the full year, these slumped to £100,000 from £1.8m in fiscal 2020.
Last year was far from a washout for Record however. Assets under management equivalents (or AUME) hit all-time highs of $80.1bn in fiscal 2021, up 37% from the prior 12-month period. This included net inflows of $9.7bn, soaring from $4.6bn previously.
Record paid a 2.3p per share dividend for the full year, unchanged from the previous 12 months. However it paid a special dividend of 0.45p, up from 0.41p in financial 2020.
Time to buy the UK share?
Looking ahead, chairman Neil Record said: “We start the year on our highest ever level of AUME, which is more diversified across our higher-margin products and provides us with an excellent platform for growth in financial 2022.”
Record noted that the company has been developing products in collaboration with its clients, one of which — the Record EM Sustainable Finance Fund — is set for launch later in June.
He also said: “The group continues to be self-financing, cash-generative and completely independent with no external debt,” adding that “the board remains confident that its change in strategic direction is the correct way forward for the long-term growth and success of the business.”
These changes include a greater emphasis on product diversification and modernising its IT infrastructure.
City analysts believe Record will bounce back into earnings growth in financial 2022. A 63% bottom-line rise is currently forecast, leaving the business trading on a forward price-to-earnings growth (PEG) ratio of 0.3.
It’s true that Record faces significant competitive and regulatory pressures that cloud its long-term earnings outlook. Still, I think its recent change of direction — allied with Record’s dirt-cheap share price — make the business an attractive stock to buy today.
