Netwealth Group Limited
NWL Details
Insights of Q3FY22: Netwealth Group Limited (ASX: NWL) provides financial services to financial intermediaries and investors. Recently, the company released the Q3FY22 report, wherein recorded a rise of 37.6% in Funds Under Management (FUA) in spite of negative market movements of $1.7 billion.
Financial Summary (Source: Analysis by Kalkine Group)
Key Risks: NWL’s business could be impacted by extreme volatility in the investment market. In addition, the company’s performance could be affected by the uncertainties in relation to the COVID-19 pandemic.
Outlook: For FY22, the company is likely to surpass the toll of $13.5 billion in FUA net inflows. NWL is also planning to roll out the new non-custodial administration and reporting solution in Q4FY22.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock of NWL is trading below its 52-week low-high average of $12.200 - $18.250, respectively. The stock has been corrected by ~13.35% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers’ average, P/E multiple, considering the investment market volatility and other material business risks, etc. For the purpose of valuation, a few peers like Pinnacle Investment Management Group Ltd (ASX: PNI), Hub24 Ltd (ASX: HUB), and Magellan Financial Group Ltd (ASX: MFG), have been considered. Considering the expected upside in valuation, rising FUA and FUM, growing managed accounts, decent outlook, and current trading levels, we recommend a ‘Buy’ rating on the stock at the closing price of $12.920, down by ~1.449% as on 02 May 2022.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
NWL Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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