TIDMASEI
Aberdeen Standard Equity Income Tst
20 May 2021
Aberdeen Standard Equity Income (ASEI)
20/05/2021
Results analysis from Kepler Trust Intelligence
This week, Aberdeen Standard Equity Income (ASEI) released its
interim results for the financial year (FY) 2021. Over the six
months ending 31/03/2021, ASEI generated NAV total returns (with
income reinvested) of 29.0%. Over the same period, ASEI's share
price rose 34.8% (with income reinvested); share price returns were
boosted by a narrowing discount to c. 8.8% from c. 12.5% in
September 2020. ASEI outperformed the benchmark on both an NAV and
share price total return basis, with the FTSE All-Share Index
generating a total return of c. 18.5%.
Kepler View
Aberdeen Standard Equity Income (ASEI) has enjoyed a purple
patch, with a return to favour of cyclical stocks and value
strategies playing to its favour in recent months. After the
announcement of the successful development of vaccines for
COVID-19, there was a substantial 'catch-up' rally in many areas of
the market which had previously lagged the presumed
'covid-beneficiaries'.
When, in November 2020, we last updated our research on ASEI, we
noted that manager Thomas Moore had highlighted such a scenario as
a potential tailwind. In the face of widening valuation dispersions
between 'value' and 'growth' stocks within the market, we reported
that: "Thomas sees it as providing the scope for a very sharp
recovery in performance should conditions change. An economic
recovery, potentially (in the team's view) linked to the
announcement of a vaccine, could prove a tailwind to a recovery in
many of ASEI's holdings." This has subsequently materialised, with
ASEI outperforming the benchmark substantially over the interim
reporting period.
The board has indicated it intends to raise dividends for FY
2021 by 0.1% over FY 2020, through the payment of a third interim
dividend of 5.2p per share and a fourth interim dividend of at
least 5.1p per share (giving a total dividend of at least 20.7p per
share for the whole financial year). This would represent a yield
of c. 5.5% on the current share price. However, it has noted that
the final dividend level will remain somewhat dependent on the
degree of recovery in the revenue account.
With FY 2020 revenue returns per share of 15.61p per share, a
covered dividend at this level will require significant further
acceleration in revenue receipts. However, the board retains
recourse to significant revenue reserves, totalling c. GBP7.6m as
at 31/03/2021. This is prior to the payment of the 2(nd) interim
dividend. Kepler estimates that, after deduction of the 2(nd)
interim dividend, but accounting for reported retained earnings
(based on reported differences in ex-income and cum-income NAVs as
at 17/05/2021), ASEI retains revenue reserve cover of c. 0.77x the
FY 2020 dividend.
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