Praemium Limited

PPE Details

Praemium Managed Accounts Platform Enjoys Leadership Position:Praemium Limited (ASX: PPS) is a leading provider of managed accounts technology, portfolio administration and financial planning tools to the wealth management industry. Client for the company are mainly firms that provide financial advice to investors, such as financial advisors, brokers, accountants, investment managers, banks and other financial providers such as superannuation administrations.

The company, as on 13 June 2019, updated regarding the change of Director’s Interest and informed that Michael Ohanessian has acquired 58,000 shares for the consideration of $0.35 per share.

Partnership with Cashwerkz:As on 05 Jun 2019, Cashwerkz announced that its digital cash investment platform can be accessed by thousands of wealth advisers in Australia using the Praemium’s Integrated Managed Accounts Platform. VMA (Virtual Managed Accounts solution) of PPS has been the market leader for a long time in the non-custodial investment space and presently, reports on >$140 bn of investment portfolios and assets.

March 2019 Quarterly Update:The company recently provided its March 2019 quarterly update with combined quarterly gross platform inflows of $744 million; UK/International gross platform inflows of $234 million (£127 million), the highest on record; Net platform inflows of $438 million (reported for the first time); and Platform FUA of $8.9 billion, up 13% over the quarter from strong inflows and improving equity markets.


Key Statistics (Source: Company Reports)

The company also mentioned that total financial advisers now have expanded on an investment universe of 1,300 domestic and international model portfolios and single investment assets, which will allow to widen their use of the platform.This new capability is likely to expand the addressable reach in the Australian platform market.
 
1HFY19 Results Highlights:

• The company reported revenues and other income of $22.9 million, posting a growth of 7% on pcp due to a strong performance across the key product lines.Platform revenue witnessed strong growth in 1HFY19 due to strong fund flows, the company being earning a basis points fee of total funds on the investment platform. Gross inflows for 1HFY19 came in at $1.4 billion, the third highest on record. At the end of December 2018, funds under administration stood at $8.4 billion, posting a growth of 14% on pcp, comprising of $5.9 billion for the Australia platform and $2.6 billion for the International platform. Revenue from Portfolio services saw a growth of 2% to $8.1 million, mainly driven by the growth seen in Praemium VMA portfolios. Planning software posted a growth of 15% to $1.1 million due to on-boarding of new clients in Asia and Australia.
• The company remained debt-free and continued to generate positive cash flows during the period. Operating cash flows saw a growth of 4%, mainly reflected receipts from customers.Higher operating cash flow was partially offset by an increase in payments to employees and suppliers. The company enjoys a strong cash reserve to further invest in earnings enhancing initiatives, including organic and strategic opportunities, as well as manage any future foreign currency impacts of the overseas operations.
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Stock Recommendation:At the current market price of $0.375 per share, the stock is trading at price-to-earnings multiple of 112.900x. Currently, the stock is trading towards its 52-week low of $0.320. Looking at the historical price performance, the stock has dipped ~58% in the last 1-year and ~40% in the last 3-months. Considering the Praemium Managed Accounts platform, a leader in the space, debt-free structure of balance sheet, well diversified revenue stream along with past price performance, we give a “Speculative Buy” rating on the stock at the current market price of $0.375 per share (up 7.143% on 13 June 2019).



PPS Daily Chart (Source: Thomson Reuters)

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