Why is this small-cap player trading at a high P/E Level – Praemium Ltd?

PRAEMIUM LIMITED (ASX: PPS)

PPS Details

Consistent performance and expansion at international front: Praemium Ltd.’s stock rose about 6.5% on April 16, 2018 as the group released an encouraging March 2018 quarter update despite the volatility seen across the global equity markets. Funds Under Management (FUA) for the March quarter of $7.8 billion were up 5.2% on the December quarter of $7.4 billion. The result when compared to standards depicted that while ASX200 dropped by 5.0%, group’s Australian platform FUA was up 5.3%. For the International platform, where the FTSE100 was down 8.2%, International platform FUA was down 1.5% in local currency. PPS combined gross inflows of $671 million, have been the third highest on record and 39% higher than the prior corresponding period. Primarily, Australian gross inflows of $484 million were the third highest on record with International gross inflows of $187 million (£105 million), the fourth highest on record. The group has added 69 new models (11% increase) on the Praemium SMA (Separately Managed Accounts) and expanded international models on the Australia SMA with the addition of leading global manager Franklin Templeton. PPS also launched online Fact Find capability for WealthCraft in the International market while it successfully completed and rolled out international MiFID II compliance requirements.
 

March 2018 Update (Source: Company Reports)
 
On the other hand, FUA for Smart Investment Management was down in local currency to £448 million in the March quarter compared to the December quarter.However, this was offset by a weaker UK sterling, which resulted in a flat FUA of $822 million.

Given the consistent performance that continues from the latest H1 FY2018 record result and long-term healthy fundamentals, we maintain a “Hold” on the stock at the current price of $ 0.660.

 
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