Hub24 Limited (ASX: HUB)
Hub24 Limited provides a comprehensive range of investment options, including managed portfolio solutions, and enhanced transaction and reporting functionality to advisors and their clients via its technology and data services platform HUBconnect Pty. Ltd. and Agility Applications Pty. Ltd.
Recommendation Rationale – SELL at AUD 31.270
- Fundamentals: In FY23, the yearly funds under administration (FUA) net inflows declined to AUD 9.7bn from AUD 11.7bn in FY22. During FY23, operating revenue and EBITDA increased by 45% and 53% YoY, respectively.
- Outlook: HUB updated the platform FUA target to AUD 92bn – AUD 100bn for FY25 (excluding PARS FUA). The company placed its key focus on coherent strategy for competitive advantage and market leadership with ongoing product & service development.
- Profit Booking: HUB exceeded its second resistance of AUD 29.000, and it is currently hovering close to its 52-week high of 32.500.
- Technical Indicator: The momentum oscillator, 14-day RSI is trading at ~75.81 levels, which is approaching the overbought zone.
- Key Risks: Volatility in the global capital markets, potential breach in transaction security, and high market competition from other data providers are material risks associated to HUB.
HUB Daily Chart
Valuation Methodology: Price/Book Approach (FY24E) (Illustrative)
Given the decline in yearly funds under administration (FUA) net inflow, the company might trade at a slight discount to its peers. For valuation, few peers like Platinum Asset Management Ltd (ASX: PNI), COG Financial Services Ltd (ASX: COG), Pinnacle Investment Management Group Ltd (ASX: PTM), and others have been considered. Considering the stock crossing second resistance zone, current trading levels and risks associated, it is prudent to book profit at the current levels. Hence, a 'Sell' rating is given on the stock at the current market price of AUD 31.270, at 11:10 AEST as on 24 August 2023.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for price data is based on August 24, 2023, and all other data such as technical indicators, support, and resistance levels are as of August 25, 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Dividend Yield may vary as per the stock price movement.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.
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