21st Dec 2023 17:52
(Alliance News) - Hipgnosis Songs Fund Ltd is "getting a grip of the situation," despite a "clear breakdown" in communication between the company and its investment adviser.
That was the view of analysts at Stifel after the embattled music intellectual property investor reported delayed half-year results in which it said some figures should be digested "with a higher degree of caution and less certainty".
This comes just two days after the firm flagged discrepancies between an independent valuation of its intellectual property assets and its manager's own view.
On an IFRS basis, net asset value per share at the end of September fell 7.2% to 110.12 US cents from 118.63 cents at the end of March, or 9.2% to 173.92 cents from 191.53 cents on an operative basis.
Stifel highlighted 10% growth in pro-forma annual revenue to USD64.9 million which it said was the "most important metric" from a shareholder perspective.
"While there has been a clear breakdown in communication between the Board and manager, the most important aspect from a shareholder perspective is whether the assets are broadly performing," the broker said.
Stifel said there were some "minor other gremlins" in the report but, broadly assuming there are no others, these should be "fixable in time."
It welcomed a notable step change in transparency and reporting, which it called "refreshing" given the new board have been in place only a short while.
In November, the company welcomed Richard Naylor as chair.
It also appointed Shot Tower Capital LLC as lead adviser to conduct due diligence on the company's assets.
"At a high level, we think it's clear they are getting a grip of the situation," the broker said.
"Cutting through the noise, these results should at least be reassuring to investors especially as sector and macro tailwinds (lower interest rates) should provide some support. It is likely to become noisier in the months ahead, but the results are broadly in line with our expectations. We think shareholders wanted a Board with more teeth and it appears this is what they are getting," the broker concluded.
Shares in Hipgnosis Songs Fund fell 0.8% to 70.15 pence each in London on Thursday.
By Jeremy Cutler, Alliance News reporter
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