HUB24 Limited

HUB Details

Inflows and FUA Remain at Higher Levels:Investment and superannuation platform provider, HUB24 Limited (ASX: HUB) released its March quarter report which elaborated on Funds Under Administration and Net Inflows. As per the release, HUB24 recorded gross inflows at $1,156 million (~41% growth) and net inflows at $793 million (~33% growth) in 3Q FY19 as compared to 3Q FY18 of gross inflows at $821 million and net inflows at $595 million. Volatility in revenue margins is correlated to the level of platform trading activity, client cash balances, etc. The company anticipates continuing its focus on assisted FUA transitions to underpin ongoing growth. Further, the management expects platform revenue margins for 2H FY19 to shrink by ~ 6% compared to 1H FY19. The company launched Customised managed portfolios during the quarter.


Average Monthly Net Inflows, FUA and Advisors (Source: Company Reports)
 
Moreover, ECP Asset Management Pty Ltd and its associated entities became the substantial holder of the group since 9 April 2019 by holding 5.38 per cent of the voting power. On the other hand, TIGA Trading Pty Ltd, a substantial holder of the group changed its holding from 12.69% of interest to 11.77% of the voting power since 8 April 2019. Importantly, UBS Group AG and its related bodies corporate ceased to be the substantial holder of the company since April 10, 2019.
 
Financial Performance in 1H FY19:  Group revenue recorded a growth of 16% to external customers to $47.1 million for 1HFY19.Despite the challenging business environment with adversely market movements, the company managed to record half-yearly net inflows at $2.1 billion. In the latest available data from Strategic Insights, the company achieved 1st place for quarterly net inflows and moved up to 2nd place on an annual basis.


Key Performance Highlights (Source: Company Reports)
 
Stock Recommendation:Looking at the comparative valuations, the stock is trading at price to book of 15.0x which seems quite stretched as compared to 1.2x of Industry median. The stock is trading slightly towards its 52-week high level of $15.380. Analysing the price movement, the stock has gained 29.18% in last one-year with 25.41% on a YTD basis and 7.84% in last one month. Considering stretched valuations, trading at near to 52-week high and decent returns in the last one-year, we assume that most of the positive developments are factored in at the current level. Hence, we maintain our “Expensive” recommendation on the stock at the current market price of $14.560 per share (down 1.688% on 18 April 2019).


HUB Daily Chart (Source: Thomson Reuters)

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