Pinnacle Investment Management Group Limited

PNI Details

Insights of 1HFY22: Pinnacle Investment Management Group Limited (ASX: PNI) is an Australian multi-affiliate investment management firm. The company offers equity, seed capital and working capital, business support, superior distribution services, and responsible entity services to its affiliates, which allows investment managers to focus on delivering investment outperformance.

• During 1HFY22, Net profit after tax (NPAT) attributable to shareholders was up by ~32% to $40.1 million as compared $30.3 million in 1HFY21.
• Aggregate Affiliates’ funds under management (FUM) of the company increased by ~33% on pcp basis and was reported as $93.6 billion for the period and remains confident of future growth, from multiple sources.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s business is exposed to risks arising from the volatility in the securities market. Also, it is exposed to a more complex regulatory environment; any failure in the compliances could lead the business to fines, penalties etc.

Outlook: With the increasing diversity of asset classes under management and sources of revenue with the objective of building enhanced resilience the company has come up with an excellent platform driven by growth within existing Affiliates, hatching new Affiliates and strategies. The company is optimistic about a strong sales pipeline throughout Private credit, Australian equities, Alternative public credit, Global value equities, Global emerging market equities. PNI looks forward to expanding internationally to the United States, Canada, Singapore, Hong Kong, the United Kingdom, South Africa, and Nordics. Looking forward, PNI is prepared for and seeking attractive inorganic growth.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of PNI is trading below its 52-week low-high average of $8.330 - $19.290, respectively. The stock has been corrected by ~20.35% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight premium to its peers’ average, P/E multiple, considering rising FUM, revenue and bottom line (NPAT), etc. For the purpose of valuation, a few peers like EQT Holdings Ltd. (ASX: EQT), Perpetual Ltd (ASX: PPT), and Netwealth Group Ltd (ASX: NWL) have been considered. Considering the expected upside in valuation, rising revenue and bottom line (NPAT), future growth drivers, optimistic long-term outlook, international market expansion and current trading levels, we recommend a ‘Buy’ rating on the stock at the closing price of $8.450, down by ~3.648% as on 4^th May 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

PNI Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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