T. Rowe Explores Asia, Taiwan Next – Analyst Blog

Consolidating its base in Asia, T. Rowe Price Group Inc. (TROW) is all set to hit Taiwan’s retail markets by launching four equity funds through an electronic fund trading platform of Marbo Group, a Taiwanese corporation, Reuters reported on Wednesday.

 

In order to sell to retail investors in Taiwan, foreign firms need to tie up with a local agent, known as a Securities Investment Consulting Enterprise. For the initial phase, T. Rowe sought approval for four equity funds, namely, an Asian ex-Japan fund, a US smaller companies fund, a US large-cap value fund and a global natural resources fund. Additionally, the company also intends to hire about 25 professionals in an attempt to ramp up its Asian presence.

 

T. Rowe is mapping its business platform in Asia by penetrating the retail market where a rapid growth is witnessed in the middle-class section of the society. Besides, while western markets appear more fragile and saturated post the global crisis, the emerging Asian economies provide a vast scope for long-term growth.

 

Hence, to capitalize on these growth drivers, T. Rowe has recently acquired a 26% stake in Unit Trust of India Asset Management Co. Ltd. (UTI AMC) and UTI Trustee Co. Pvt. Ltd., for INR 6.5 billion (US$142.4 million). Following this, the company announced its intention to purchase a substantial share in China Asset Management (China AMC). Following the Taiwan penetration, T. Rowe is also expected to expand its administrative and market base in Hong Kong.

 

Over the last 30 days, 2 of the 17 analysts covering T. Rowe have lowered their estimates for the first quarter of 2010, while 6 upward revisions were witnessed. Currently, the Zacks Consensus Estimate for first quarter operating earnings is of 57 cents per share, which would be up 110.5% from the year-ago quarter.

 

The higher number of upward estimate revisions for the first quarter indicates a likelihood of upward pressure on the performance of the stock in the near term.

 

With respect to earnings surprises, the stock has been almost steady over the last four quarters, with all positive surprises. The average remained positive at 14.8%. This implies that T. Rowe has surpassed the Zacks Consensus Estimate by 14.8% over that period.

 

T. Rowe’s earnings of 57 cents per share for fourth quarter 2009 came in ahead of the Zacks Consensus Estimate of 55 cents due to higher-than-expected top-line growth and higher assets under management (AUM).

 

T. Rowe Price operates with a diverse business model and keeps introducing new funds to complement and expand the investment offerings from time to time. Further, the company remains debt free with substantial liquidity that includes cash and mutual fund investment holdings. However, T. Rowe’s AUM business is exposed to the ongoing market volatility and competitive risks, which could add pressure while operating in a completely new environment.