AGF Mangement Continues to increase Income from Foreign Subsidiaries

      AGF released it's fourth quarter and annual results on January 23.It showed a slight increase in total Assets Under Management (AUM) and a good increase in mutual fund sales.But the surprise was the healthy increase in net income  buoyed by continued increases from foreign subsidiaries.Net income from subsidiaries was $15 million in 2017 but jumped to $25 million in 2018 for a full 30% of total income.Results were buoyed by a tax provision  release of $24 million from it's transfer pricing case.AGF tells investors that it also launched a new ETF called the AGFiQ series which has been pretty successful in increasing net sales.
   AGF has seen total revenues fall every year gradually from 2014 although they have started to climb back up again in 2018.But this trend has reversed for net income  which has increased continuously since 2014.And the difference in these two trends is due to Income from Affiliates.It climbed up to $8 million in Q4 and was a full 30% of total net income.As can be seen below the train is just starting to leave the station.
        Other Highlights                    

Firstly AGF has stopped the bleeding from redemptions;2017 had net redmptions and 2018 showed net sales increases.AGF has also tried several new ventures including a $75 million venture in  a closed end fund called InstarAGFAsset Management.More importantly there has been a pick up in their institutional business which is less volatile than retail business.Net income and e.p.s. has shown a good jump in 2018 but it is very difficult  to tell how much of their $24 million of tax provision release has flowed through to net income.What is more certain is that net income from foreign subsidiaries has steadily increased and should increase further in 2019.This includes their British subsidiary(which was almost sold) that has been discussed in an earlier Workathon blog.Look for 2019 e.p.s of $.75 to $.90 and this will give a better idea of net income without any tax provision.This growth could increase AUM and net income so their P/E ratio  at 10 times will be closer to other financials.And that will send AGF back to the $8-$8.50 level.              https://www.omers.com/    https://www.otpp.com/