HUB24 Limited

HUB Details
 
Growth Across the Segments: HUB24 Limited (ASX: HUB) connects advisers and their clients through innovative solutions that create business opportunities. The business focuses on the delivery of the HUB24 platform and is engaged in providing data, software and reporting services to Australian stockbroking and several Wealth Management companies.

Highlights of FY19 Results for the period ending 30 June 2019: HUB recently, announced its results for FY19, wherein the company reported group revenue at $96.3 million as compared to $84 million in FY18. Underlying NPAT of the company stood at $6.8 million, up 27% on FY18 while underlying EBITDA came in at $14.8 million, grew 30% on y-o-y basis. The company reported underlying Platform EBITDA at $18.0 million, an increase of 52% from FY18, and Funds Under Administration (FUA) at $12.9 billion, increased by 54% yoy. HUB reported platform revenue of $54.1 million, up 36% on y-o-y basis. During FY19, the company maintained the position as the fastest growing platform provider. It reported investment across growing HUB24’s distribution footprints, which resulted in 84 new deals with licensees, 398 new advisers introduced to the platform and recorded an annual net inflow of $3.9 billion during FY19.


FY19 Financial Highlights (Source: Company Reports)

The company declared an unfranked dividend of AUD 0.02600, payable on 18 October 2019. The stock has delivered an annualized dividend yield of 0.42%.

Outlook: The Management guided that the company will continue to innovate and focus on launching foreign currency capabilities along with providing additional flexibility for licensees to investment managers. The Board expects a significant growth during FY20, led by continued investments strong pipeline. The Management has upgraded the FUA range for FY21 at $22 billion - $26 billion from the earlier guidance of $19 billion - $23 billion.

Stock Recommendation:  The stock of HUB is quoting at $11.310 with a market capitalization of ~$707.89 million. The stock is trading towards the lower band of its 52-week trading range of $10.13 to $15.55. The stock has delivered returns of 1.56% and -25.20% during the last three-months and six-months, respectively. The business has delivered a return on investment of 11.7% as compared to the industry median of 6.2% during FY19. Advisers and their clients are seeking the benefits of value and choice from using HUB24’s market-leading platform. The company intends to enhance its distribution footprint nationally, by new recruitments and is ready to take advantage of the organic growth. Considering the aforesaid facts, current price movements and business prospects, we recommend a ‘Buy’ rating on the stock at the current market price of $11.310, up 2.446% as on 04 October 2019.
 

 
 HUB Daily Technical Chart (Source: Thomson Reuters)
 
 
 

Netwealth Group Limited

NWL Details
 
Robust FUA Growth Aids Positive Business Prospects: Netwealth Group Limited (ASX: NWL) provides financial services, including managed funds, investor directed portfolio services, a superannuation master fund, separately managed accounts and self-managed superannuation administration services to Financial Intermediaries and investors. Recently, NWL announced a change in interest in one of its directors named, Jane Anne Tongs who disposed 76,159 numbers of ordinary shares at a consideration of $595,289.89.

Highlights of FY19 Results for the period ended 30 June 2019: NWL announced its full-year results for FY19, wherein the company delivered revenue from ordinary activities at $98.77 million, up 18.6% from FY18. Underlying net profit came in at $35.986 million in FY19 as compared to $29.04 million during FY18. FY19 was another successful year for the company with underlying EBITDA growth of 22.9% and underlying NPAT growth of 23.9%. This performance was driven by growth in Funds Under Administration (FUA) of 29.9% and Funds Under Management (FUM) of 38.7%. The company reported a 75% growth in FUA, aided by the migration of existing financial intermediaries during the year. Inflow from 308 new financial intermediaries contributed approximately 25% of the FUA increase during the year.


FY19 Financial Highlights (Source: Company Reports)

The company paid a fully franked dividend of AUD 0.06600000 on 26 September 2019.

Outlook: The Company expects a net inflow of FUA to remain higher than $7 billion, while FUA is likely to surpass $30 Billion as on June 2020.

Stock Recommendation: The stock of NWL is trading at $8.760 with a market capitalization of ~$2.08 billion. The stock is trading at the upper band of its 52-week trading range of $6.350 to $10.110. The stock has delivered 17.98% and 0.95% during the last three-months and six-months, respectively. The stock has delivered a positive return of 11.94% in the last one month while corrected 9.06% during the last five trading sessions (till 3 October 2019). The stock is available at a price to book value multiples of 53.7x on TTM basis which is significantly higher than the industry median of 11.3x on TTM basis. Hence, considering the aforesaid facts, valuation and historical price movement, we have a watch view on the stock at the current market price of $8.760, up 2.696% as on 04 October 2019 and suggest investors wait for better entry level.
 

 
NWL Daily Technical Chart (Source: Thomson Reuters)

 

Commonwealth Bank of Australia

CBA Details
 
Lower Home Credit on the face of Macro Slowdown:Commonwealth Bank of Australia (ASX: CBA) provides integrated financial services, primarily focused on retail and commercial banking across Australia, New Zealand, United Kingdom, United States, China, Japan, Singapore and several other countries. The bank has a customer base of more than 17.4 million.

FY19 Financial Highlights for the year ended 30 June 2019: Commonwealth Bank of Australia announced itsFY19results wherein operating income stood at $24,407 million, down 2% on y-o-y basis while cash NPAT came in at 4.7% lower at $8,492 million on y-o-y basis. Transaction deposit balances grew at 9% on y-o-y basis at $169,648 million as on 30 June 2019. Net interest income declined 1.2% as volume growth was offset by lower home loan margins and higher funding costs due to elevated basis risk. Business lending increased 4% with the business bank seeing growth in diverse sectors, particularly business services and transport.


FY19 Financial Highlights (Source: Company Reports)

Outlook: The company cited a lower growth environment but expects an improvement in the housing market including, improved clearance rates, stabilization of prices in Sydney and Melbourne, and marginally higher housing credit growth in coming quarters.

Stock Recommendation: The stock of CBA is quoting at $77.59 with a market capitalization of ~$137.35 billion. The 52-week trading range of the stock stands at $65.23 to $83.99. Currently, the stock is trading towards the upper band of the 52-week trading range. The stock has delivered -4.46% and 8.33% returns during the last three-months and six-months, respectively. The stock has corrected 5.15% during last five trading sessions. The stock has a dividend yield ratio of 5.57% on annualized basis. The stock is available at a price to book value multiple of 2x on trailing twelve months (TTM) basis as compared to its industry median of 1.3x. Considering the aforesaid facts, business scenario and outlook, we have a wait and watch stance on the stock at the current market price of $77.59, up 0.323% as on 04 October 2019.
 

 
CBA Daily Technical Chart (Source: Thomson Reuters)

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