Praemium Limited

PPS Details

Overvalued at Current Juncture: Praemium Limited (ASX: PPS) has recently released its quarterly update for period ending September 2018, and has now surpassed $8.5 billion in terms of Funds under Administration (FUA). The group’s revenue growth has been mainly driven by strong growth of 29% in Data & Insights business division and 19% growth in Media business unit during the same period. Besides this, the company has commissioned its new projects in the US and Georgia-Pacific regions through the strategic acquisition with global research agency, i.e., House of Brand. In the domestic market, the company has also started to provide market research services to its customer with the help of healthy relationship with Medibank and Qantas Loyalty. From the analysis standpoint, the Company has achieved a five-year compound annual growth (CAGR) in revenue of 23% to FY18 while EBITDA recorded CAGR growth of 50.1% percent over the four years (FY15-18). Further, the balance sheet remains healthy with a net cash reserve of $12.12 Mn, and the management continues to pursue acquisition opportunities which could be self-funded at the smaller end. Hence, we expect that this earnings performance will continue to grow further based on current momentum in the business.


Sustained Growth (Source: Company Reports)

Meanwhile, the share price has risen 17.4% in the past six months as at November 06, 2018 and traded at higher PE level of 231.43x compared to peers. As of now, the stock has a market capitalization of circa $328 mn and a beta of 2.0x as on 5-Year (monthly basis), signaling overvalued scenario at the current juncture. We, therefore, recommend a ‘Hold’ on the stock at the current market price of $0.815.


PPS Daily Chart (Source: Thomson Reuters)
 

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