AMP Limited

On a downtrend profile: The management of AMP Limited (ASX: AMP) reflected positive view on the results for the 1H 2018. As per the management, the company is still in a strong position to encounter the challenges it might face moving forward despite the impact the group had owing to Royal Commission. AMP Capital as well as AMP Bank witnessed the strong momentum in 1H 2018 and the company’s Australian wealth management business managed to witness the upward momentum amid fluctuating market conditions, controlling the costs as well as improving the revenue base. The management of AMP Limited expects that moving forward it might witness obstacles to the growth initiatives. The company plans to work from the clients’ perspective. The company plans to transform the advice business, improve the service of the portfolio review as well as plans to strengthen the risk management business. Meanwhile, there is pressure on margins and earnings per share. AMP’s EV/EBITDA has been quite high around 21 and business profitability is a cause of concern.

FY18 Financial Performance (Source: Company Reports)
 
AMP also updated the market about Standard & Poor’s credit ratings on the group. Particularly, rating has been affirmed as A credit rating for AMP Bank, AMP and AMP Group Holdings while AMP Life has been lowered from AA- to A+. Standard & Poor’s has removed the CreditWatch with negative implications for the Company, AMP Group Holdings and AMP Life, and revised its outlook to negative; and on the other hand, credit ratings by other ratings agencies remain the same. On the corporate front, Francesco De Ferrari is joining the group as CEO, effective 1 December 2018.
 
Moving Average Convergence Divergence (MACD) has been applied on the daily chart of AMP Limited. MACD line has crossed the signal line and is moving downwards. This momentum is expected to continue moving forward. The valuation may look under-appreciated but there might be more to come in AMP’s way. Thus, we maintain our view to avoid AMP Limited at the current market price of A$3.050 (close to 15 year low levels). On October 3, 2018, the company had a market capitalization of $8.84 billion.
 
 

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