Stocks’ Details

Pinnacle Investment Management Group Limited

Buy-Back Update: Pinnacle Investment Management Group Limited (ASX: PNI) is an Australian-based investment management firm. The market capitalisation of the company as on 18 February 2021, stood at ~$1.84 billion. As per a recent update, the company has announced that it is undertaking an employee share scheme buy-back of 300,000 shares. The buy-back and corresponding cancellation is expected to be implemented on 8 March 2021.

H1FY21 Financial Update: The company reported decent financial results during the period, with an increase of ~120% in NPAT to $30.3 million from $13.8 million in the prior corresponding period. It declared a fully franked interim dividend of 11.7 cents in H1FY21. The Aggregate Affiliates’ fund under management (FUM) stood at $70.5 billion as on 31 December 2020 which is an increase of 20% from 30 June 2020. The Aggregate Retail FUM was at $16.7 billion during the same period end. There was a net inflow of $5.5 billion during H1FY21. Cash and Principal Investments were at $51.4 million as on 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company believes it is on the right trajectory for sustained sales growth, with high-performing affiliates having decent consultant ratings. PNI has a significant international distribution reach, which is a source of present and future FUM growth.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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: Higher fund inflows along with the rise in the market have helped the company and its affiliates to drive higher profitability during H1FY21. As per ASX, the stock of PNI is trading above its average 52-weeks’ levels of $2.370-$10.130. The stock of PNI gave a positive return of ~68.32% in the past three months and a positive return of ~72.15% in the past six months. On a technical analysis front, the stock of PNI has a support level of ~$7.208 and a resistance level of ~$10.082. We have valued the stock using the P/E multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe the company can trade at a slight premium to its peer average, considering its positive sentiments regarding share buy-back, decent financial performance and quality affiliates. For the purpose, we have taken peers such as Netwealth Group Limited (ASX: NWL), Centuria Capital Group (ASX: CNI), Perpetual Limited (ASX: PPT), to name a few. Considering the current trading levels, expected upside in valuation, robust financial performance and strong fund inflows, we recommend a ‘Hold’ rating on the stock at the current market price of $9.83, up by 0.203% as on 18 February, 2021.

Quickfee Limited

H1FY21 Performance Update: Quickfee Limited (ASX: QFE) develops and generates revenue from the QuickFee technology platform. The market capitalisation of the company as on 18 February 2021, stood at ~$111.10 million. As per a recent update, the company has announced its H1FY21 results. Despite the COVID-19 related challenges, it has witnessed decent growth across platform transactions, lending and new clients in the US. During the period it successfully launched QuickFee Instalments in the US and the Australian markets. Revenues grew by 22% to $4.5 million in H1FY21, from $3.2 million in the previous corresponding period. There was a simultaneous increase in gross profit by 39% to $3.2 million. TTV in the US increased by 182% to US$285 million, with an annualised run rate of over US$0.7 billion.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company continues to achieve robust growth in the US, as it looks to leverage its first-mover advantage and the presence of a large market for professional services. 

Stock Recommendation: QFE reported US revenues of $2.2 million in H1FY21, an increase of 93% on the previous corresponding period. The gross profit was up by 101% to $1.7 million during the same time. As per ASX, the stock of QFE is trading below its average 52-weeks’ levels of $0.130-$0.975. The stock of QFE gave a positive return of ~9.87% in the past one month and a positive return of ~1.13% in the past one week. On a technical analysis front, the stock of QFE has a support level of ~$0.376 and a resistance level of ~$0.504. On a TTM basis, the stock of QFE is trading at an EV/Sales multiple of 36.5x, lower than the industry average (Professional & Commercial Services) of 63.9x. Considering the current trading levels, resilient financial performance despite the COVID-19 headwinds, decent increase in TTV, valuation on TTM basis, and key risk associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.445, down by 11% as on 18 February 2021.

Douugh Limited

Impressive Growth Performance: Douugh Limited (ASX: DOU) is a fintech company using Artificial Intelligence to help customers manage their money. The market capitalisation of the company as on 18 February 2021, stood at ~$98.923 million. In a recent update, the company has announced that it has witnessed strong customer and transactional growth in its initial three months of operation. The Douugh iOS App has been installed a total of 29,034 times since its launch on 17 November 2020, reflecting impressive compounded monthly growth rates (CMGR) across key metrics.

Key Metrics Performance (Source: Company Reports)

Q2FY21 Quarterly Update: During the quarter, the company launched AI-backed banking and wealth management platform in the US. DOU entered into a JV partnership with Humm Group Limited to launch an interest-free BNPL feature in the US market.  The company has completed a placement of $12 million during the period, which also included a strategic investment of $2.5 million from Humm Ventures. DOU has a cash position of $16.02 million in the bank at the end of Q2FY21.

Respond to ASX Query: The company responding to an ASX query with respect to the change in the price from a low of $0.175 to an intra-day high of $0.375 in the last few days, it has informed that it has no information regarding the price rise in the recent trading in its securities.

Outlook: The company expects the approved customer acquisition run rate to increase gradually as marketing and onboarding funnels are further optimised, and new features (Wealth Jars & BNPL) are brought into play.

Stock Recommendation:  The company has recently launched its product –Autopilot, which is a self-driven money management feature within its App. Further, its decent balance sheet will place it at an advantageous position to accelerate customer growth through prioritised product development activities. As per ASX, the stock of DOU is trading below its average 52-weeks’ levels of $0.048-$0.490. The stock of DOU gave a positive return of ~41.17% in the past one month and a negative return of ~17.24% in the past three months. On a technical analysis front, the stock of DOU has a support level of ~$0.141 and a resistance level of ~$0.305. Considering the current trading levels, increased customer and transactional growth in the past few months, the formation of a strategic JV with Humm Group Limited, launch of Autopilot feature and decent performance in key metrics, we recommend a ‘Hold’ rating on the stock at the current market price of $0.24, down by 12.728% as on 18 February 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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