PPS and HUB Performance (Source: Company Reports and Thomson Reuters)

Praemium Limited

Decent FUA Performance in September end 2018: Praemium Limited’s (ASX: PPS) stock tumbled 6.25% on October 15, 2018 following the release of its Q1FY18 update which was not in-line with the market participants. As per the release, the company witnessed record gross asset inflows of $645 Mn comprising of Australian gross inflows of $466 Mn and International gross inflows of $179 Mn as at September 2018 quarter. Despite declining global equity markets in September month and outflows from the Smartfund range of funds, the group reported that its Funds under administration (FUA) rise was of 29% to $8,580 Mn in Q1FY18 as compared to the prior corresponding period which was at $6,661 Mn. Moreover, FUA into the Australian retail superannuation offering (SuperSMA) has surpassed $1 billion for the first time with a 43% uplift in FUA over the past 12 months. Besides this, the Self-Invested Personal Pensions (SIPPs) on its in-house UK platform flagged up to 354 schemes at the end of September from 135 schemes as at 30 June 2018, representing 162.2% growth on Q-o-Q basis. On analysis front, ROE improved from 4.1 percent in FY17 to 7.6 percent in FY18 and whereas ROIC improved from 4.0 percent in FY17 to 7.4 percent in FY18. As at 30 June 2018, the group had cash and cash equivalents of $12,120,879 with debt-free status. It implies that PPS can put the funds to operational uses rather than restricting them for the repayment of the debts. The management expects that its strategy is to be the destination of the choice for investors looking to maximize the benefits of their savings for retirement.


Q3FY18 Financial Metrics (Source: Company Reports)

Meanwhile, the stock has generated YTD return of 31.51% and traded at high PE level of 274.29x. Based on foregoing, we maintain our “Hold” recommendation on the stock at the current market price of $0.900 while investors seemed to be expecting more from the quarterly update.
 

HUB24 Limited

Steller Performance in FY18: HUB24 Limited (ASX: HUB) posted its FY18 earnings report for the period ended 30 June 2018 wherein revenue grew by 36 percent and amounted to $84.0 Mn against the prior year. It was mainly driven by the 51.0% revenue growth of platform business segment, 80.9% growth of IT services revenue segment, and 16.2% growth of Licensee segment revenue during the same period as compared to the prior year. Underlying EBITDA grew by 123% to $11.4 million in FY18 from $5.1 million in the previous year. Underlying Net Profit after Tax (NPAT) stood $5.4 Mn in FY18, exhibiting significant growth of 129 percent on a Y-o-Y basis. At 30 June 2018, the Group had a net cash of $17.0 Mn with no debt facility. Further, the Board of Directors declared an inaugural unfranked dividend of 3.5 cents per share (cps). The dividend will be paid on 19 October 2018, with a record date of 18 September 2018 and an ex-dividend date of 17 September 2018. However, the Board intends to target a dividend payout ratio between 40% and 60% of HUB24’s underlying net profit after tax. It is expected that once tax losses have been fully recouped then the future dividends will be franked to the maximum extent as possible. In our view, the company has a positive outlook as the Group continues to invest in the business to pursue an appropriate corporate activity that creates shareholder value.


FY18 Financial Metrics (Source: Company Reports)

HUB stock is added in S&P/ASX All Australian 200 Index, effective from September 24, 2018 as per September 2018 Quarterly Rebalance of the S&P/ASX Indices. Meanwhile, the share price has risen 16.69 percent in the past six months as at October 12, 2018 and traded at higher PE level of 97.80x, signifying to be overvalued at the current juncture. As of now, the stock traded at $11.900 with resistance level of $13.5 and support level of $9.86. Based on the foregoing and current trading level, we suggest for a  wait and watch view on the stock at the current price of $ 11.900.
 

Comparative Price Movements (Source: Thomson Reuters)
 

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