HSBC
introduce
Amundi SA ( OTCPK:AMDUF ) recently reported that its Fourth Quarter 2023 Results, which I discuss below. I will also compare the company to DWS Group, one of Europe’s largest stock exchange-listed peers.
In short, I think there is little room for Amundi Improve operations (which is already great). That, coupled with its sizable tangible book premium and slow organic growth, makes the company more of a revenue earner through covered calls and cash-secured puts than a growth/rerating story. Therefore, I rate the stock a Hold.
Company Profile
You can access Amundi’s financial results here. The company is majority-owned by French bank Crédit Agricole ( OTCPK:CRARF ), which owns 68.93% of the asset manager. Amundi manages €2,037 billion in assets, mainly in Europe (75%) and Asia (20%):
Managed asset details (Amundi 2023 fourth quarter results presentation)
as you can see Judging from the chart above, Amundi focuses on active asset management, with 52% of its assets under management (AuM) allocated under active asset management strategies, while passive strategies account for only 17% of AUM.
Operational Overview
2023 Amundi Records new traffic €26 billion (2022: €7 billion), plus positive market developments AUM More than 2 trillion euros.this cost/revenue The ratio was 53.2%, unchanged from the same period last year (2022: 53.3%).this Management fee deposit Little has changed this year, with AUM at 17.7 basis points (2022: 17.8). Altogether, these developments resulted in a 2.1% revenue growth By 2023, growth will be 3.9% Adjusted net profit to 1.2 billion euros. Adjusted earnings per share in 2023 will be €6, an annual increase of 3.6% (2022: 5.79).
Amundi also announced the acquisition of Zurich-based asset management firm Alpha Associates, which will increase its assets under management by €8.5 billion and strengthen its expertise in European private markets. The transaction is expected to generate an ROE return of 13% after synergies, resulting in EPS growth of 2%.
2023 Financial Highlights (Amundi 2023 fourth quarter results presentation)
Capital Structure
Tangible stockholders’ equity As of the end of 2023, the market capitalization is 4.3 billion euros, which is much lower than the current market capitalization of 12.4 billion euros. Credit Agricole implements debt-free capital structure, net lending position Based on €1.8 billion Financial Report for the First Half of 2023:
Net financing position breakdown (Amundi Financial Report for the First Half of 2023)
Amundi has also adopted a very conservative dividend policy, with the 2023 dividend set at 4.10 euros per share, the same as in 2022 and 2021 (the payout ratio is set at above 65% according to the 2025 strategic plan). Relative to a share price of approximately 60.7 euros, the yield is 6.8%.
Comparison with DWS
Below, I’ll compare Amundi’s performance relative to DWS, which is controlled by Deutsche Bank (DB).
| Metric 2023\Company | Amondi | Decentralized WS |
| Assets under management, billion euros | 2,037 | 896 |
| Net Asset Management Flow, billion euros | 26 | 28.3 |
| Management fees, basis points | 17.7 | 27.1 |
| Cost to income ratio,% | 53 | 64 |
| Price/Tangible Books | 2.9 | 1.8 |
| P/E ratio | 10.1 | 13.4 |
Source: Author’s calculations based on information disclosed by the company
As can be seen from the table above, this comparison is not one-sided. On the one hand, Amundi’s AUM is growing at half the rate of DWS, given that it manages more than twice as many assets as DWS but attracts lower absolute AUM traffic in 2023. Additionally, Amundi trades at a higher price/tangible book value of 2.9.
On the other hand, Amundi’s business operations are more efficient, with a cost-to-income ratio that is 11% lower than DWS. In addition, Amundi’s price-to-earnings ratio is more attractive, with its 2023 price-to-earnings ratio of only 10.1 times.
All in all, I view Amundi as a well-run but slow-growing business with little room for operational improvement, while DWS is more of a turnaround asset management company with faster growth.
Last but not least, Amundi is performing much better than AXA’s asset management arm, with a much lower cost/income ratio and positive net flows. You can read more in my AXA article.
in conclusion
Amundi delivered strong operating performance in 2023. The company is expected to continue growing in 2024, with weaker organic growth supplemented by acquisitions like Alpha Associates. The company has a very conservative balance sheet, which makes its price-to-earnings ratio of 10 extremely attractive. However, considering the 2.9x tangible book premium, I think investors may only see high single-digit returns going forward. As such, I’m neutral on Amundi, which offers a good opportunity to generate options income via covered calls and cash-secured puts, given the company’s bleak growth prospects but solid operating results.
Although the French parent bank offers a different risk profile, buying Crédit Agricole shares directly could be another way to gain exposure to Crédit Agricole. However, compared to BNP Paribas ( OTCQX:BNPQF ) and Societe Generale ( OTCPK:SCGLF ), I consider Crédit Agricole to be the most expensive French bank on the market. So there seems to be no cheap way to get into Amundi’s operational excellence.
Thank you for reading.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
