Netwealth’s Outlook Remains Positive for FY21 as FUM Grows
- Netwealth outlook remains upbeat despite falling 24 per cent from highs.
- The company is Australia’s Fastest growing platform provider.
- Macquarie have upgraded Netwealth from Neutral to outperform.
Netwealth (ASX: NWL) shares have surged over 5 per cent today within the first 30 minutes of trading as the company looks to close the 31 per cent gap between its all-time high. The Australian Fintech company experienced a bumper 2020, taking full advantage of increased interest in and trading within global equity markets. As the country’s fastest-growing platform operator with $9.5 billion of net inflows for the 12 months to September 30th 2020, Netwealth is looking to continue this strong performance through FY21.
Netwealth is a leading provider of superannuation and non-superannuation investment management products. The company operates management funds and self-managed superannuation administration services. Their product offering includes the Netwealth Super Accelerator, Wealth Accelerator, Managed Account, and the Netwealth Global Specialist Series managed funds. Currently, the company have 88,000 account holders and 2,500 advisers using their platforms.
On February 17th 2021, Netwealth released its half-year results to the ASX, with its shares plummeting 9 per cent following the announcement. This occurred despite the company recording a 30 per cent increase in earnings before interest taxation, depreciation and amortization (EBITDA) to $40.5 million. As a result, net profits rose 34.5 per cent against the corresponding prior period allowing the company to pay an interim fully franked dividend of 9.06 per share. Despite these strong results, Netwealth underwhelmed market expectations.
Moving forward, the company has a wide range of strategic initiative’s which will facilitate future growth. In particular, the company’s investment in fintech data solutions company Xeppo will enable Netwealth to revitalize their online portals. Xeppo specializes in connecting, matching and reconciling data within the financial technology industry and has already begun implementing a range of data aggregation, analytics and CRM solutions.
Moving forward, Netwealth will aim to take advantage of an increased interest in financial markets and investing. They expect net FY21 funds under management inflows to reach $8.5 to $9 billion combined with consistent and increasing profitability and EBITDA. The most attractive aspect of the the business model is their predictable and increasing recurring revenues tied to recurring fee’s.
Recently, Netwealth's share price has used the 38.2 per cent Fibonacci Retracement as a key level of support before bouncing higher. The MACD and Stochastic Oscillator have both also crossed positive on a daily chart indicating the potential appreciation of shares price. Despite having recently fallen from all-time highs, Netwealth is seen as undervalued by Macquarie Group, who yesterday upgraded the company from Neutral to Outperform with 16 per cent upside. Macquarie have cited how “short term outlook for flows are encouraging given ongoing disruptions.”