Fiducian Group Limited

 

FID Details
 
FID Buys $56M in Funds Under Advice: Fiducian Group Limited (ASX: FID) is involved in providing specialist financial services to financial advisers and retail and wholesale clients across Australia. The market capitalisation of the company stood at ~$132.06 Mn as on 29 April 2020.Recently, the company stated that Fiducian Financial Services, its financial planning subsidiary, has assisted the acquisition of a regional financial planning business for its franchise office, which is situated in Gippsland, Victoria. The buyout adds an additional $56 million in Funds under Advice. 
 
March 2020 Quarter Update: Cash balance of the company as on 31 March 2020 stood around ~$11.9 million. Net cash from operating activities for the March quarter stood at ~$3.1 million.  Net cash used in investing activities and financial activities stood at $83k and $3,951K, respectively.
 

Cash Highlights (Source: Company Reports)
 
COVID-19 Update: In a recent update, the company stated that given the current uncertainty owing to coronavirus led crisis, it is taking necessary measures to ensure the health and wellbeing of staff, employees and clients. In addition, the company is putting restrictions on travel and encouraging social distancing measures along with work from home facility. The company also stated that it is too early to assess the financial impact of the Pandemic on its business.
 
1HFY20 Key Financial Highlights: During the period, the company reported operating revenues amounting to $27.8 million, reflecting a rise of 13%. Net Revenue for the period soared 12% year over year. In 1HFY20, gross margin came in at 73%, slightly lower than the year-ago gross margin of 74%. During the half, Underlying EBITDA came in at $8.9 million, up 12% year over year. Underlying NPAT went up 13% on pcp and stood at $6.43 million. This signifies underlying earnings per share of 20.4 cents for 1HFY20. Total funds under management, advice and administration stood at $8.2 billion, indicating an increase of 30%.
 

1HFY20 Financial Highlights (Source: Company Reports)
 
Outlook:  The company focuses to expand its foothold in new profitable markets by successfully   leveraging Manage-The-Manager model strategy. The company further continues to draw high quality planners and develop through value accretive acquisitions. It also aims to commercialise financial planning software and develop new system functionality, thereby leveraging platform administration services.
 
Stock Recommendation: The stock of the company has corrected ~21.79% in the last six months, whereas it has run up 12.9% in the last one month. The stock is currently trading slightly below the average of its 52-week trading range of $3.00 - $6.270.At the closing price of $4.38, annual dividend yield for the stock stands at 5.43%, with P/E ratio of 12.31x. EBITDA margin of the company stood at 32.7% in 1H FY20, up from 31.9% in 2HFY19. The company reported debt to equity ratio of 0.21x in 1HFY20, lower than the industry average of 0.53x. Moreover, the company has a positive ROE of 15% in 1HFY20. On the valuation front, the stock is tradingat an EV/Sales multiple of 2.5x as compared to the industry median of 4.5x on TTM (Trailing Twelve Months) basis. Hence, we recommend a “Speculative Buy” rating on the stock at the current market price of $4.38, up 4.286% on 29 April 2020.  
 
 
FID Daily Technical Chart (Source: Thomson Reuters)
 

Money3 Corporation Limited

 

MNY Details
 
Revenues up 44.4% Year Over Year: Money3 Corporation Limited (ASX: MNY) offers consumer finance required for the purchase and maintenance of vehicles. Recently, the company disclosed that Kate Robb and Stuart Robertson, directors in the company, have acquired 37,000 direct ordinary shares and 70,000 indirect ordinary shares, respectively.
 
March 2020 YTD Key Financial Highlights: During the period, the company reported revenue of $93.3 million, up a whopping 44.4% on pcp. EBITDA and NPAT on normalised basis stood at $44.4 million and $22.9 million, respectively, depicting a growth of 43.6% and 49.2% on pcp terms. The company’s NPATwas almost in line with the prior outlook of $23 million. Whereas, EBITDA margin and NPAT margin stood at 47.6% and 24.6%, respectively. The business’s gross loan book at the end of 31 March 2020 stood at $443 million, while the company remained well funded with a strong cash balance of $43 million at the end of the period. 
 

Key Highlights (Source: Company Reports)
 
What to expect: The debt facility in Australia can be stretched to a maturity date of December 2022, while in New Zealand the debt facilities can run until April 2022.
 
Valuation Methodology: Price to Earnings Multiple Approach (Illustrative) 

Price to Earnings based Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: The stock of MNY is trading at $1.5, with a market capitalisation of ~$244.58 million. At the current market price, the stock is quoting at the lower band of its 52 weeks trading range of $0.670 and $3.040. The stock of MNY has corrected ~36.23% in the last six months, whereas it has run up 57.14% in the last one month.At the closing price of $1.5, annual dividend yield for the stock stands at 7.58%, with P/E ratio of 8.19x. We have valued the stock using P/E multiple based illustrative relative valuation method and for the purpose, we have taken peers such as Collection House Ltd (ASX:CLH), Pacific Current Group Ltd (ASX: PAC) and Navigator Global Investments Ltd (ASX: NGI), to name few. As a result, we have arrived at a target price with lower double-digit upside (in percentage terms). Therefore, considering the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.5, up 13.636% as on 29 April 2020, due to robust March quarter update.

 
MNY Daily Technical Chart (Source: Thomson Reuters)

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