Q: Can I ask for an updated view of RCG. Any upside?
5i Research Answer:
RCG has been essentially flat year-to-date and is expensive at 36.5x forward earnings. Revenue growth has started to display some positive momentum but RCG is still struggling in terms of profitability. Assets-under-advisory hit $40.2B in November, up 2.2% from the prior month and 14.2% since year-ended. It is good to see the growth in the company asset base with revenues growth improving. On a price to book basis it is cheap at 0.5x and similarly cheap on a forward sales basis 0.3x. Analysts forecast that it will generate 32c of EPS next year. There is some upside if it can start to grow the top and bottom line, but we want to give it another quarter or two to see if this materializes.