Pinnacle Investment Management Group Limited

PIN Details

Increasing FUM: Pinnacle Investment Management Group Limited (ASX: PNI) is an investment management company based in Australia. The company’s principal activities include developing and operating investment management businesses and providing distribution services, business support and responsible entity services to the Pinnacle Affiliate. PNI has reported a significant rise in its Funds Under Management (FUM) to $84.9bn as on 30 April 2021 against $70.5bn as on 31 December 2020, depicting a rise of 20.4%. PNI has informed that mandate crystallisation has accelerated throughout FY21 along with international channels delivering positive net flows. The company has reported elevated performing Affiliates with robust local and international investment consultant ratings. 

1HFY21 Financial Highlights: PNI has registered an increase in revenue to $14.38mn in 1HFY21 against $11.41mn in 1HFY20 on the back of significant performance fees. The company has reported an increase in its bottom-line to $30.34mn in 1HFY21 against $13.82mn in 1HFY20. PNI has witnessed a decline in its cash balance to $10.80mn as on 31 December 2020 against $16.06mn as on 30 June 2020.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is engaged in investment management. Therefore, the company is exposed to funds’ performance risk for business growth. The company may see a decline in its funds under management on the back of Covid-19 impacts on the economy. 

Outlook: PNI expects an innovative dual structure product launch with Pinnacle Affiliates to be launched in FY21 and going forward. The company has already witnessed a successful listing of the Hyperion Global Growth Companies Fund (Ticker: HYGG) on 22 March 2021.

Valuation Methodology: P/BV based Relative Valuation Method (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 gave a return of ~8.55% in the last one month and a return of ~10.99% in the last three months. In the last six months the stock went up ~68.8%. The current market capitalisation of PNI stands at ~$2.09bn as on 15 June 2021. The stock is currently trading close to its 52-weeks’ high level of ~$11.04. The stock has made a high of ~$11.02 and a low of ~$10.25 in today’s trade. On the technical analysis front, the stock has a support level of ~$10.29 and a resistance of ~$11.072. We have valued the stock using the P/BV multiple-based illustrative relative valuation method and arrived at a target price with a correction of high single-digit (in % terms). We believe that the company can trade at a slight premium as compared to its peer median, considering an increase in its top line in 1HFY21 and an increase in its FUM as on 30 April 2021. For this purpose, we have taken peers such as Platinum Asset Management Ltd (ASX: PTM), Magellan Financial Group Ltd (ASX: MFG), EQT Holdings Ltd (ASX: EQT). Considering the decent stock price movement in past few months, current trading levels, technical levels, and valuation, we suggest investors to book profits and wait for a better entry level. Hence, we give a “Sell” rating on the stock at the current market price of $11.00, (as on June 15, 2021, 10.16 AM (GMT+10), Sydney, Eastern Australia). 

PNI Daily Technical Chart, Data Source: REFINITIV

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.

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