IOOF Holdings Ltd (ASX: IFL)

Growing Adviser base: IOOF Holdings had achieved positive net flows of $895m in funds under management, administration and advice (FUMA) for the second quarter of FY18, indicating a growth of 70%. Total FUMA as at 31 December 2017 totalled $120.0bn while funds under supervision were $34.6bn. Advice flows were $696m for the quarter against $538m of prior corresponding period. Total funds under advice from the 43 advisers who have joined the Group from another licensee is $1.6bn. The group’s total number of advisers is 47 after the transition of a further four advisers from licensee in January 2018. The group is however, witnessing some margin pressure in its advice and platform segments. Cost concerns also rise from the latest acquisition of ANZ Wealth business. However, the cost management efforts and ANZ Wealth transaction expected to increase scale of IFL’s advice-led business, are key to the stock momentum. IFL stock has risen over 30% in last one year and is trading at higher levels. We give a “Hold” on the stock at the current price of $10.88
 

Combined Value with ANZ Wealth (Source: Company Reports)
 

Invocare Ltd (ASX: IVC)

Trading on Volatility: Invocare is a popular consumer discretionary stock in the small cap segment. The group has delivered good returns earlier at the back of company-wide efforts and has been seen to benefit from the dynamics of the Australian funeral sector. However, consumer preferences and increased competition are weighing against the stock. The group has undertaken a three-year $200m capital program (Protect and Grow) in an attempt to revive brands, facilities and operating structure; and used its debt to fund the same. The group also acquired the business and assets of J.A. Dunn Funeral Services (Dunns) based in Launceston, Tasmania in order to enter the Launceston market through an established brand with access to well-located facilities with an operating mortuary. Dunns directs 200 funeral cases and generates revenue of $1m per annum and this is expected to benefit IVC. On the other hand, InvoCare advised that its subsidiary InvoCare Australia is lodging an application to withdraw its takeover offer for all the issued shares in Norwood Park with the ASIC as one of the defeating conditions is not capable of satisfaction. Meanwhile, AustralianSuper Pty Ltd increased its stake to 6.05% from 5.02% in the group. With a rise of 3% in last five days post a 10.5% fall in past one month (as at March 13, 2018), we believe that the stock is trading at volatility and is “Expensive” at the current price of $13.92

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