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Buy scenario in this Diversified Financials Stock- PTM

Jan 21, 2022 | Team Kalkine
Buy scenario in this Diversified Financials Stock- PTM

 

Platinum Asset Management Limited

PTM Details

Funds Under Management: Platinum Asset Management Limited (ASX: PTM) is non-operating holding company of Platinum Investment Management Limited and its controlled entities. For the month ended 31 December 2021, the company reported funds under management of $22,006 million as compared to $22,050 million for the month ended 30 November 2021.

FY21 Financial Highlights:

  • For the year ended 30 June 2021, PTM posted a growth of 6% in revenue & other income to $316.4 million as compared to $298.7 million in FY21. Profit after tax for the year rose by 5% to $163.3 million.
  • PTM’s average FUM for FY21 of $23.4 billion was in line the average FUM of $23.7 billion for FY20.
  • PTM closed FY21 with strong balance sheet, evident by rising cash & term deposits of $193 million as on 30 June 2021 against $155 million as on 30 June 2020.

Cash & Term Deposits (Source: Analysis by Kalkine Group)

Key Risks: The company’s operational and financial performance could be impacted by rising market share of competitors. In addition, its business could also be impacted by the volatility in the equities market.

Outlook: PTM believes that its business is resilient and well placed for future growth on the face of strong position in Australian retail market and rising desire for international equity exposure in Australia. In addition, the company would continue to look for opportunities to increase client access via product innovation and new markets.

Valuation Methodology: P/BV 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 PTM is currently trading close to its 52-week low level of 2.510, offering a decent opportunity for accumulation. The stock has been corrected by ~3.42% and ~17.53% in the past one month and three months, respectively. The stock has been valued using a P/BV Multiple based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight premium to its peers’ average P/BV multiple, considering the growing earning and performance of funds, etc.  For the purpose of valuation, peers such as Pinnacle Investment Management Group Ltd (ASX: PNI), Magellan Financial Group Ltd (ASX: MFG), and MA Financial Group Ltd (ASX: MAF) have been considered. Considering the expected upside in valuation, strengthened balance sheet, growing topline and bottom line, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $2.545, as on 20 January 2022, 12:10 PM (GMT+10), Sydney, Eastern Australia.

PTM Daily Technical Chart, Data Source: REFINITIV  

Note: The purple line reflects the RSI (14-day period)

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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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