reports
NETWEALTH GROUP sees a downgrade to Slightly Negative on account of le...
The independent financial analyst theScreener just lowered the general evaluation of NETWEALTH GROUP (AU), active in the Asset Managers industry. As regards its fundamental valuation, the title now shows 0 out of 4 stars while market behaviour can be considered moderately risky. theScreener believes that the title remains under pressure due to the loss of a star(s) and downgrades its general evaluation to Slightly Negative. As of the analysis date November 26, 2021, the closing price was AUD 15....
- Gareth James
Morningstar | Netwealth’s Still Looks Expensive Despite Further Stro...
We maintain our AUD 5.50 per share fair value estimate for Netwealth following the release of fourth-quarter funds under management and administration, or FUMA, data. Despite a 32% increase in FUMA to AUD 27 billion in fiscal 2019, growth was largely in line with our 30% forecast and we have maintained our earnings forecast. FUMA growth slowed from 45% in fiscal 2018 and we expect growth will continue slowing down to 25% in fiscal 2020 as the business matures. Despite falling 20% over the last m...
- Gareth James
Netwealth’s Still Looks Expensive Despite Further Strong FUMA Growth
We maintain our AUD 5.50 per share fair value estimate for Netwealth following the release of fourth-quarter funds under management and administration, or FUMA, data. Despite a 32% increase in FUMA to AUD 27 billion in fiscal 2019, growth was largely in line with our 30% forecast and we have maintained our earnings forecast. FUMA growth slowed from 45% in fiscal 2018 and we expect growth will continue slowing down to 25% in fiscal 2020 as the business matures. Despite falling 20% over the last m...
- Gareth James
Morningstar | Netwealth Remains Expensive Despite Strong Third-Quarter...
Netwealth’s quarterly result was broadly in line with our forecast for AUD 27 billion in FUMA by fiscal year-end, which implies a 30% increase on the prior year. We continue to expect Netwealth to experience fee compression, due its lack of an economic moat and a gradual slowing in FUMA growth over the next decade. However, operating leverage should enable strong EPS growth, and we forecast a relatively strong EPS CAGR of 15% over the next decade. We have maintained our fair value estimate at ...
- Gareth James
Netwealth Remains Expensive Despite Strong Third-Quarter Funds Growth
Netwealth’s quarterly result was broadly in line with our forecast for AUD 27 billion in FUMA by fiscal year-end, which implies a 30% increase on the prior year. We continue to expect Netwealth to experience fee compression, due its lack of an economic moat and a gradual slowing in FUMA growth over the next decade. However, operating leverage should enable strong EPS growth, and we forecast a relatively strong EPS CAGR of 15% over the next decade. We have maintained our fair value estimate at ...
- Gareth James
Morningstar | Netwealth Still Overvalued as Fee Pressure Impacts 1H Re...
We were surprised Netwealth's share price rose by 7% following its first-half result considering it lacked any big surprises and contained more evidence of fee pressure. As fund flows were announced last month, the market was mainly focused on revenue and profit growth, both of which were broadly in line with our expectations. We have maintained our earnings forecasts but increased our fair value estimate by 4% to AUD 5.50 due to the time value of money impact on our financial model. However, at...
- Gareth James
Morningstar | Netwealth's Lack of Switching Costs Means Price-Based Co...
We expect Netwealth to continue to capture market share and increase platform funds under administration, or FUA. The firm currently comprises just 2% of the Australian platform market, and our forecasts imply that it will achieve market share of around 6% by 2028. However, with low switching costs, we expect strong FUA growth to be offset by industry fee compression, as platform providers largely compete on price. We expect Netwealth to generate a revenue CAGR of 13% over the next decade, and t...
- Gareth James
Netwealth Still Overvalued as Fee Pressure Impacts 1H Result
We were surprised Netwealth's share price rose by 7% following its first-half result considering it lacked any big surprises and contained more evidence of fee pressure. As fund flows were announced last month, the market was mainly focused on revenue and profit growth, both of which were broadly in line with our expectations. We have maintained our earnings forecasts but increased our fair value estimate by 4% to AUD 5.50 due to the time value of money impact on our financial model. However, at...
- Gareth James
Netwealth's Lack of Switching Costs Means Price-Based Competition Is a...
We have maintained our earnings forecasts and AUD 5.30 fair value estimate for Netwealth following its second-quarter trading update which was in line with our expectations. Funds under management and administration, or FUMA, fell by 1% versus the prior quarter but were impacted by particularly weak equity markets, including a 9% fall in the S&P/ASX 200 index. Excluding market movements, FUMA grew by 4.8%, versus the prior quarter but we expect the 15% fall in net FUMA inflows was the main c...
- Gareth James
Morningstar | Netwealth Remains Overvalued as 2Q Fund Flows Disappoint...
We have maintained our earnings forecasts and AUD 5.30 fair value estimate for Netwealth following its second-quarter trading update which was in line with our expectations. Funds under management and administration, or FUMA, fell by 1% versus the prior quarter but were impacted by particularly weak equity markets, including a 9% fall in the S&P/ASX 200 index. Excluding market movements, FUMA grew by 4.8%, versus the prior quarter but we expect the 15% fall in net FUMA inflows was the main cause...
- Gareth James
Morningstar | Netwealth Remains Overvalued as Weak Financial Markets I...
We expect Netwealth to continue to capture market share and increase platform funds under administration, or FUA. The firm currently comprises just 2% of the Australian platform market, and our forecasts imply that it will achieve market share of around 6% by 2028. However, with low switching costs, we expect strong FUA growth to be offset by industry fee compression, as platform providers largely compete on price. We expect Netwealth to generate a revenue CAGR of 13% over the next decade, and t...
- Gareth James
Netwealth Remains Overvalued as 2Q Fund Flows Disappoint the Market
We have maintained our earnings forecasts and AUD 5.30 fair value estimate for Netwealth following its second-quarter trading update which was in line with our expectations. Funds under management and administration, or FUMA, fell by 1% versus the prior quarter but were impacted by particularly weak equity markets, including a 9% fall in the S&P/ASX 200 index. Excluding market movements, FUMA grew by 4.8%, versus the prior quarter but we expect the 15% fall in net FUMA inflows was the main c...
- Gareth James
Netwealth Remains Overvalued as Weak Financial Markets Impact 2Q
Netwealth continues to generate strong asset growth, but the 8% increase in funds under management and administration, or FUMA, in the first quarter to AUD 22 billion was in line with our forecasts. We expect strong FUMA growth to continue but at a moderating rate as the business matures. Although current FUMA is up 42% over the past 12 months, this includes two particularly strong quarters and we continue to expect a 30% growth rate over fiscal 2019. Importantly, we also expect fee compression ...
- Gareth James
Morningstar | Netwealth Remains Overvalued as Strong 1Q Asset Growth M...
Netwealth continues to generate strong asset growth, but the 8% increase in funds under management and administration, or FUMA, in the first quarter to AUD 22 billion was in line with our forecasts. We expect strong FUMA growth to continue but at a moderating rate as the business matures. Although current FUMA is up 42% over the past 12 months, this includes two particularly strong quarters and we continue to expect a 30% growth rate over fiscal 2019. Importantly, we also expect fee compression ...
- Gareth James
Netwealth Remains Overvalued as Strong 1Q Asset Growth Meets Expectati...
Netwealth continues to generate strong asset growth, but the 8% increase in funds under management and administration, or FUMA, in the first quarter to AUD 22 billion was in line with our forecasts. We expect strong FUMA growth to continue but at a moderating rate as the business matures. Although current FUMA is up 42% over the past 12 months, this includes two particularly strong quarters and we continue to expect a 30% growth rate over fiscal 2019. Importantly, we also expect fee compression ...
- Gareth James
Morningstar | Fee Pressures Beginning to Show Despite Netwealth's Stro...
The most notable aspect of Netwealth's fiscal 2018 financial result was that management expects the EBITDA margin of 51% achieved in fiscal 2018 to remain stable in fiscal 2019, which reflects increased reinvestment in the business. Although we previously expected margin expansion in fiscal 2019 and beyond, via fixed cost leverage, we're not altogether surprised competitive pressures are weighing on margins. This aligns with our view the company lacks an economic moat. We've largely maintained o...
- Gareth James
Morningstar | Netwealth continues to grow platform market share, but f...
We expect Netwealth to continue to capture market share and increase platform funds under administration, or FUA. The firm currently comprises just 2% of the Australian platform market, and our forecasts imply that it will achieve market share of around 6% by 2028. However, with low switching costs, we expect strong FUA growth to be offset by industry fee compression, as platform providers largely compete on price. We expect Netwealth to generate a revenue CAGR of 13% over the next decade, and t...
- Gareth James
Fee Pressures Beginning to Show Despite Netwealth's Strong Flows
The most notable aspect of Netwealth's fiscal 2018 financial result was that management expects the EBITDA margin of 51% achieved in fiscal 2018 to remain stable in fiscal 2019, which reflects increased reinvestment in the business. Although we previously expected margin expansion in fiscal 2019 and beyond, via fixed cost leverage, we're not altogether surprised competitive pressures are weighing on margins. This aligns with our view the company lacks an economic moat. We've largely maintained o...
- Gareth James
Netwealth continues to grow platform market share, but fee pressure pe...
We increase our fair value estimate for Netwealth by 6% to AUD 5.30 following its fourth-quarter update and pre-release of its fiscal 2018 result. Higher-than-expected growth in funds under management, or FUM, which has a flow-on effect on our revenue forecasts, drives the increase in our valuation. However, at the current market price of AUD 9.13, we still believe the stock is overvalued. Our long-term investment thesis is intact. While we still expect strong growth in funds under management an...
- Gareth James
Stronger-Than-Expected FUM Growth Drives 6% FVE Increase, but Netwealt...
We increase our fair value estimate for Netwealth by 6% to AUD 5.30 following its fourth-quarter update and pre-release of its fiscal 2018 result. Higher-than-expected growth in funds under management, or FUM, which has a flow-on effect on our revenue forecasts, drives the increase in our valuation. However, at the current market price of AUD 9.13, we still believe the stock is overvalued. Our long-term investment thesis is intact. While we still expect strong growth in funds under management an...
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