Value Partners:Head under water again

Event

VP reported Nov-end AUM of US$13.8bn (flat MoM). Major funds were allbelow HWM by Nov-end. We maintain a Neutral rating on the stock. We seedownside risks to our FY16E forecasts.

Impact

Major funds were 3% below HWM by Nov-end. No performance fees couldbe charged at current levels. We expect major funds to be 1% below HWM byFY16E, or improve by 3% in Dec16. We forecast a total HK$94m ofperformance fees in 2H16, and a US$14.4bn of AUM for FY16E (a 8% of YoYcontraction).We see downside risks to our forecasts.

Inflows should remain weak. It’s less likely for a big improvement in inflowsin Dec16 under management transition. We’re forecasting zero net inflows for4Q16. This would lead us to a forecast US$965m of outflows for 2016. For2017, we’re optimistically forecasting a total US$1.5bn of net inflows. Thiswould be the key ratio to determine the share price movement in 2017.