Praemium Limited

A Look at Recent Update: Praemium Limited (ASX: PPS) has been notified by a key Australian institutional client of the investment platform that it has selected an alternative supplier. ANZ Private currently generates 8% of the company’s revenue, which for the 2018 calendar year was $4 million, and it is expected that the business transition will commence from the new financial year.

The company had executed several new agreements this financial year including, the renewal of contact with Asgard Capital Management from November 2019 for up to 6 years, with a minimum contract value of $3 million per year, and Morgan Stanley Wealth Management Australia currently utilising all of the products and services available through the fully Integrated Managed Accounts platform, with a contract expansion in April of approximately $1 million per annum. Moreover, Shaw and Partners are using all the products and services which are available through the fully Integrated Managed Accounts platform, with contract expansion in April of around $1 million per annum.

As per the release dated April 8, 2019, effective from today, Shaw and Partners extended their existing VMA contract for the period of 5 years with an option to extend for further 5 years. Additionally, the relationship has been expanded to include portfolio administration for over 2,500 client portfolios, which Shaw and Partners had previously administered and reconciled internally.

1H FY 2019 Financial Metrics (Source: Company Reports)

The consolidated profit after tax attributable to the members of the Group was $633,647 for 1HFY19, a 13% decrease compared to the profit after tax of $724,558 for the prior corresponding period. The company’s revenue and other income increased to $22.9 million in 1HFY19, a 7% increase compared to the 1HFY18 primarily driven by Platform revenue, which grew from strong fund flows, with the company earning a basis points fee of total funds on its investment platform.

Strategy going forward: Complimented with the expanded sales & marketing capability, Praemium is focussed towards accelerating growth. The UK market has seen a steady increase in the use of professionally-run model portfolios, and the company is therefore seeing an increase in interest in its Managed Accounts platform in the UK and in international markets.

The company had a decent revenue growth and is possessing strong balance sheet to fund the growth.

However, the stock has declined ~15.315% during the day’s trade on the back of news on losing a premium client, but, this seems to be an adverse reaction from the market while the company has many other contracts in place.Also, the company’s stock has delivered the return of -7.50% in the span of one month.

Considering the above factors, we maintain a “Speculative Buy” rating on the stock at current market price of $0.470 per share.  
 

HUB24 Limited

Trading At Higher Level: HUB24 Limited (ASX: HUB) is a financial sector company that offers superannuation and investment platform services. The flexible technology of the company allows advisers and licensees to customise their platform solution to fit their business.
 

Financial Results for 1H FY 2019 (Source: Company Reports)

The company reported an underlying net profit after tax of $3.1 million in 1H FY 2019 which is up by 46% on 1HFY18 and group revenue was up by 16% on the prior corresponding period to $47.1 million in 1HFY19.During 1H FY 2019, the company maintained the strong growth trajectory whilst continuing to make deployments to capture increasing market opportunities and building strong foundations for future. Also, it is well-positioned post the release of final recommendations of the Royal Commission.

Guidance on FUA: The company’s focus on clients’ needs and best interests are expected to open institutional Approved Product Lists. It has a Funds Under Administration target range of $19 billion to $23 billion by June 2021. The company seeks to capitalise on its strong foundations and investment to maximise growth in the context of unprecedented market opportunity.

The stock witnessed the rise of 19.54% over the last one month and rose 24.25% in the span of three months. As a result, it is trading almost closer to its 52-week higher level.

Hence, we have an “Expensive” recommendation on the stock at current market price of $14.920 per share (up 2.897% on April 8, 2019).     

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