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1. Company Snapshot

1.a. Company Description

M&G plc, through its subsidiaries, engages in savings and investment businesses in the United Kingdom and internationally.The company operates through two segments, Asset Management, and Retail and Savings.It offers retirement, savings, and investment management solutions to its retail and institutional customers.


The company also provides individual and corporate pensions, annuities, life, savings, and investment products.It serves individual savers and investors, financial advisers and paraplanners, and institutional investors.The company was formerly known as M&G Prudential PLC and changed its name to M&G plc in September 2019.


M&G plc was founded in 1848 and is headquartered in London, the United Kingdom.

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1.b. Last Insights on MNG

M&G plc's recent performance was buoyed by signs of progress on US tariff deals in early May, which eased trade tensions and lifted stock markets. The company's robust fundamentals and investor appetite for its stocks and funds also contributed to its positive momentum. According to a recent report, M&G's popular stocks and funds were among the top picks for investors in May. Additionally, any recent earnings release showing improved sales or profitability would further reinforce the company's growth trajectory and investor confidence.

1.c. Company Highlights

2. M&G 2024 Full Year Results Analysis

M&G delivered a resilient performance in 2024, with a focus on financial strength, simplification, and growth. The company generated over £900 million in capital, reduced debt by £461 million, and increased its Solvency II ratio to 223%, up 20 points year-on-year. Notably, M&G announced its first dividend increase since 2019, reflecting its confidence in future growth and financial discipline. The company also enhanced its cost-saving target to £230 million by 2025, demonstrating its commitment to operational efficiency.

Publication Date: Apr -08

📋 Highlights
  • Strong Financial Performance and Capital Generation: - The company generated over £900 million in capital, reduced debt, and increased the dividend for the first time since 2019, reflecting financial strength and confidence in future growth.
  • Strategic Shift in Business Model: - The transition from a traditional annuity business to a fee-based model, exemplified by the 100-Zero product, aims to reduce capital intensity and enhance long-term sustainability.
  • Enhanced Solvency and Capital Efficiency: - The Solvency II ratio improved to 223%, providing a strong capital buffer. The company aims to deploy surplus capital to support growth and return value to shareholders.
  • Growth in Asset Management and Private Markets: - Asset Management operating profit increased by £47 million, driven by strong performance in private markets, which now account for £74 billion in AUM. Strategic acquisitions in real estate and private credit further bolster capabilities.
  • Focus on Cost Management and Efficiency: - The company exceeded cost-saving targets, achieving £188 million in savings, and aims to enhance efficiency further, aligning with its strategic priorities of simplification and cost discipline.

Financial Performance and Strategic Priorities

M&G’s financial performance was underpinned by strong capital generation and disciplined cost management. The company achieved an operating capital of £2.7 billion, exceeding its targets, while reducing costs and improving efficiency. The Life business, which contributes 90% of With-Profit returns, continues to drive growth, supported by the Asset Management division, which saw operating profits rise by £47 million to £289 million. However, the Life business faced headwinds from lower amortization rates and annuity surplus impacts, though PruFund demonstrated resilience, with redemptions halving in H2, signaling improved customer retention.

Strategic Initiatives and Growth Drivers

M&G’s strategic initiatives are centered on growth in the BPA market, international expansion, and optimizing earnings through fee income and capital efficiency. The company’s integrated business model, leveraging internal capital and expertise, positions it well for long-term success. Notably, M&G has shifted to a progressive dividend policy, starting with a 2% DPS increase in 2024, signaling a commitment to returning capital to shareholders while maintaining financial discipline. The company also emphasized its focus on fee-related earnings and capital-light growth, aligning with its 10-year plan to diversify earnings and reduce reliance on capital-intensive products.

Valuation and Market Outlook

From a valuation perspective, M&G’s trailing twelve-month P/E ratio of 25.78 and P/B ratio of 1.31 suggest that the market is pricing in expectations for continued growth and improved profitability. The company’s dividend yield of 10.79% reflects investor confidence in its ability to generate consistent returns and return capital to shareholders. M&G’s focus on capital generation, cost discipline, and growth positions it well to navigate market uncertainties and deliver long-term value. As the company progresses with its strategic initiatives, investors can expect a balanced approach to capital management, with a focus on growth and shareholder returns.

Risks and Considerations

While M&G’s performance is encouraging, risks remain, including the impact of interest rates on the With-Profit Fund and market volatility. The company’s conservative approach to risk management and its strong balance sheet provide a solid foundation for navigating these challenges. With its focus on fee-related earnings and capital-light growth, M&G is well-positioned to capitalize on opportunities in the asset management and life insurance sectors.

Conclusion

Citation: “The company has a very strong balance sheet. So, while we have got all that, and we have got significant capital surplus, the focus is on the organic growth.” – Clive Bolton, M&G’s CEO.

3. NewsRoom

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UK Stocks That May Be Priced Below Their Estimated Value

Nov -06

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M&G reports £365 bln in assets, exceeding FY 2025 consensus

Nov -05

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Miners prosper as FTSE 100 makes steady progress

Oct -13

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3 UK Stocks Trading Up To 31.5% Below Intrinsic Value Estimates

Oct -08

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M&G First Half 2025 Earnings: EPS Misses Expectations

Sep -07

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M&G's (LON:MNG) Dividend Will Be £0.067

Sep -06

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UK Stocks Estimated To Be 11.1% To 26.1% Below Intrinsic Value

Sep -05

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The most popular stocks and funds investors bought in May

Jun -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.18%)

6. Segments

Life

Expected Growth: 1.2%

M&G plc's Life segment growth of 1.2% is driven by increasing demand for retirement products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation and cost savings initiatives have improved operational efficiency, contributing to the growth. Furthermore, the segment has benefited from the rising popularity of sustainable and responsible investment products.

Wealth

Expected Growth: 1.1%

M&G plc's 1.1% growth is driven by its diversified investment portfolio, strong brand recognition, and increasing demand for retirement savings products. Additionally, its cost-saving initiatives, expansion into new markets, and strategic partnerships have contributed to its growth. Furthermore, the company's focus on sustainable investing and ESG considerations has attracted environmentally conscious investors, supporting its growth momentum.

Asset Management

Expected Growth: 1.3%

M&G plc's 1.3% growth in Asset Management is driven by increasing demand for sustainable investments, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, cost savings initiatives, and strong investment performance have contributed to its growth. Furthermore, the acquisition of Prudential's UK and European business has enhanced its scale and capabilities.

Corporate Centre

Expected Growth: 0.8%

M&G plc's Corporate Centre segment growth of 0.8 is driven by effective cost management, disciplined capital allocation, and strategic investments in digital transformation. Additionally, the segment benefits from a strong brand reputation, diversified revenue streams, and a solid balance sheet, enabling it to navigate market volatility and invest in growth initiatives.

7. Detailed Products

Individual Savings Accounts (ISAs)

Tax-efficient savings accounts for individuals to save for their future

Pensions

Retirement savings plans for individuals and employers

Investment Funds

Diversified investment portfolios managed by experienced investment managers

Annuities

Guaranteed income for life in retirement

Protection Insurance

Life insurance and income protection products for individuals and families

Wealth Management

Bespoke investment management services for high net worth individuals

Institutional Investment Management

Customized investment solutions for institutional clients, such as pension funds and insurance companies

8. M&G plc's Porter Forces

Forces Ranking

Threat Of Substitutes

M&G plc operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand reputation and diversified product offerings help to mitigate the threat of substitutes.

Bargaining Power Of Customers

M&G plc's customers have some bargaining power due to the availability of substitutes, but the company's strong brand reputation and diversified product offerings help to reduce this power.

Bargaining Power Of Suppliers

M&G plc's suppliers have some bargaining power due to the company's dependence on them for raw materials and services. However, the company's strong relationships with suppliers and its diversified supply chain help to mitigate this power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry in the industry is high due to the presence of many established players and the need for companies to differentiate themselves through innovation and marketing.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.77%
Debt Cost 10.96%
Equity Weight 33.23%
Equity Cost 11.39%
WACC 11.10%
Leverage 200.89%

11. Quality Control: M&G plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
KBC Ancora

A-Score: 7.4/10

Value: 4.2

Growth: 4.8

Quality: 8.6

Yield: 9.4

Momentum: 8.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
MandG

A-Score: 6.7/10

Value: 7.5

Growth: 1.8

Quality: 4.2

Yield: 10.0

Momentum: 7.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Amundi

A-Score: 6.2/10

Value: 5.5

Growth: 5.0

Quality: 5.3

Yield: 9.4

Momentum: 5.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Janus Henderson

A-Score: 6.1/10

Value: 5.4

Growth: 4.2

Quality: 8.5

Yield: 7.5

Momentum: 6.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
GBL

A-Score: 6.1/10

Value: 5.8

Growth: 3.9

Quality: 3.4

Yield: 7.5

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Ninety One

A-Score: 6.0/10

Value: 5.2

Growth: 2.0

Quality: 7.5

Yield: 8.8

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.75$

Current Price

2.75$

Potential

-0.00%

Expected Cash-Flows