M & G PLC (LSE:MNG) - Long-term hold ISA


Sector: - Financials

How found: - Looking for companies under 10 years old, strong dividend pattern and dividend cover with PE below 10, just to see what would be thrown up for further analysis.

Company Background: - M&G is a UK based investment and savings company, it invests on behalf of others under the brands Prudential and M&G Investments, customer based is local and international. M&G was spun out of the Prudential in October 2019 and share price has increased 14% in last 3 months. Initially the Prudential shareholders received M&G shares and sold these early on after the rise in price, hitting the price.

Ratios: - PE 8.8 (on future earnings ) ranks 11 out of 65 in this industry, Dividend Yield 6-7% (estd), Dividend Cover 2.5(estd), Operating Margin 14%, Market Capital £6bn (Jan 2019), Relative Strength 3m 8%, 1m 1.8%.

Rough Technical: - This share has only recently come to market in October 2019. Opening price was 201p highest has been 251p. Today 247p.

Liquidity: - Average daily share volume over last 3 months unavailable currently, trading today is 1.6M (1300), well within my threshold of liquidity. 62% of the shares are held by shareholders holding below 2%. The remaining 38% of shares are held by Capital International 10%, BlackRock 6.6% and other large funds holding portions from 5% to 2%.

Brokers Opinion: - No broker opinions as yet, but the target price is 280p (15% above todays price).

Spread: - spread 8bps, very good.

Beta: - positive against the market, but company to young to calculate.

Accounts: - Expect turnover and figures to be good.

Main Risks: - Young Company.

Main Favourables: - Getting in at the ground floor of a well-run company, dividend yield is expected to be good in the next 2 years market expects 10% as special dividends .

Declaration: - No Interest in this share presently, will be placing in my ISA for a long-term hold, hoping for a good entry price around 235-240p.