A lot of panic can be felt across the global financial landscape amid the escalating trade tensions between the two superpowers of the world. China’s strategy to devalue its yuan is hurting more to Australian stock market that lost 2.845% to $84.010 in a day trade as at 6 August 2019 (3:52 PM AEST). All the industries are trading in red on ASX, with financials sector down 2.29% to 6,191.3 points, reflecting a loss of 141.9 points in a day trade. With this scenario, let’s have a look at five financial sector stocks:
Pinnacle Investment Management Group Limited (ASX: PNI)
Financial sector company Pinnacle Investment reported a continued strong growth in 2019, with FUM, earnings and dividends all growing substantially. The company’s net fund inflows totalled $6.5 billion, including $2.9 billion of retail net inflows, and overall aggregate Group FUM increased 43% to $54.3 billion at the year ended 30 June 2019.
In the Annual Report of FY2019, Pinnacle presented that its Aggregate Affiliate revenues grew 41% to $236.8 million. Performance fees represented only 6.5% of Affiliates’ revenues this year. 94% of the Affiliates’ strategies and products that reportedly have a track record of at least five years outperformed their benchmarks over the five years to 30 June 2019, although shorter term investment performances were more mixed, ranging from some very strong performances to some weaker performances over shorter time periods.
Snapshot of Pinnacle’s Financial Performance of FY2019 (Source: Company Annual Report)
The company’s NPAT from continuing operations was $30.5 million (up 32% from the 2018 financial year), which represented basic earnings per share of 18.3 cents, up 28% from the 2018 financial year. Pinnacle also retained a strong and flexible balance sheet, with cash and principal investments of $51.2 million at the end of the year (up from $31.4 million at 30 June 2018).
On the back of strong inflows, the company declared a fully franked dividend of 15.4 cents per share for FY2019, up 32% on previous corresponding period. It includes the final dividend of 9.3 cents, payable on 4 October 2019 with a record date of 20 September 2019.
PNI’s stock price edged up by 5.297% to trade at $4.057 on 6 August 2019 (12:34 PM AEST). The stock is trading at a price to earnings multiple of 25.460x with a market capitalisation of $707.7 million.
Over the past 12 months, the stock declined by 37.48% including a negative price change of 33.73% in the past three months.
PSC Insurance Group Limited (ASX: PSI)
PSC Insurance Group Limited (ASX: PSI) has continued to build a strong business throughout Fiscal 2019 on the back of organic and acquisitive growth strategy. During the year, the company took two quality acquisitions:
- Paragon Insurance Holdings Ltd (Paragon) – SPA expected to be executed for the acquisition on 24 July 2019 (UK). Paragon provides both direct and wholesale brokerage services in the United Kingdom and wholesale brokerage services to clients in the United States from where it generates over 60% of its total revenue.
- Griffiths Goodall Insurance Brokers (GGIB) – PSC has agreed to acquire the GGIB business as announced to the market 9 July 2019 (Australia).
Looking forward, the company confirmed the expectation of more than $43.0 million in FY19 underlying EBITDA while the underlying revenue is expected to be ~120 million. PSC expects Paragon’s acquisition to result in incremental annual EBITDA of £4.2 million (approximately A$7.5 million equivalent) for PSC. Whereas, GGIB is expected to deliver full EBITDA in Fiscal 2020.
PSI stock price crashed 5.923% in a day trade after the company today announced the completion of share issue in final settlement of institutional placement. The stock is trading at $2.70 on 6 August 2019 (2:30 PM AEST), with a PE multiple of 48.640x and a market capitalisation of $744.58 million.
Centuria Capital Group (ASX: CNI)
Centuria Capital Group has grown its total assts under management from $4.9 billion to $6.2 billion in FY2019. It included the recent acquisition of Heathley Limited and acquisition of the $645 million Hines office portfolio, one of the largest real estate transactions of the financial year.
Centuria recently has inked unconditional contracts to takeover Adelaide’s 80 Flinders Street office building at a purchase consideration of $127 million, generating a new fund for Centuria’s unlisted division. The fund is reportedly expected to deliver a yield of 6.50% in FY20 and 6.60% in FY21, following the launch expected in August 2019.
Located in Adelaide’s core CBD precinct, 80 Flinders is an A-Grade building that was constructed in 2006 and refurbished in 2019. The asset has a Weighted Average Lease Expiry (WALE) of over 4.0 years and is 100% occupied with 95% of gross income underpinned by multinational and ASX listed companies.
Centuria expects to continue on FY2019 momentum with a broader range of accretive real estate takeovers in Fiscal 2020 across its portfolio of unlisted, listed and healthcare funds. For the year ended 30 June 2019, the company announced a final distribution of 5.00 cents per security, comprising of 0.50 cents of Fully Franked Dividend and 4.50 cents of Trust Distribution.
CNI stock price declined 0.258% to trade at $1.930 on 6 August 2019 (3:00 PM AEST). The stock’s price to earnings multiple stands at 12.760x with a market capitalisation of $742.18 million. Over the past 12 months, the stock has surged up by 36.21% including a positive price change of 38.71% in the past three months.
Also Read: Strong growth of Centuria’s AUM in 1H19
IMF Bentham Limited (ASX: IMF)
Global litigation funder, IMF Bentham Limited is headquartered in Australia that has a reputation of trusted provider of innovative litigation funding solutions through its diverse portfolio of litigation funding assets.
IMF recently announced that it expects to receive a total revenue of ~$9.3 million as a part of defendant in an Australian case which has reached final settlement.
In the quarter ended 30 June 2019, IMF enjoyed its strongest performance for FY19, both in terms of growth of its portfolio and generation of revenue. This translates a recognition of $18.7 million gross income during the quarter and additional investment settlements that could reportedly result in further gross consolidated income of $69.2 million in FY20.
Also, IMF increased its funds under management (FUM) with the launch of Fund 5, which has an investment capacity of US$500 million. IMF’s aggregate FUM was close to A$2 billion at the end of the quarter, which exceeds its previously stated target for the end of FY19 by 30%.
IMF stock slipped by 1.744% to trade at $3.380 on 6 August 2019 (3: 23 PM AEST). Over the past 12 months, the stock has surged up 27.88% including a positive price change of 22.42% in the past three months.
FlexiGroup Limited (ASX: FXL)
FlexiGroup Limited is a financial sector company, famous for bringing in Buy Now Pay Later (BNPL) trend in Australia. The company recently integrated its two legacy platforms – OxiPay and Certegy EziPay – into a unique and innovative platform- ‘humm’- that enables shoppers to spend from $1 up to $30,000 completely interest free.
FXL’s humm platform accounts for 17% market share and 40% of receivable of total BNPL transaction volume in Australia, with over 1 million of customer base. The platform recently gained momentum on securing partnership with a number of high-profile retailers in Australia that include Myer, JB Hifi New Zealand, Strandbags, IKEA, National Dental Plan and National Hearing, among others.
FlexiGroup today announced that Carol Australia Holdings Pty Limited has become a substantial holder in FXL with effect from 2 August 2019. Carol now holds 5.80% voting right in the company.
FXL shares plunged 5.65% to trade at $1.670 on 6 August 2019 (3: 40 PM AEST). The stock is trading at a price to earnings multiple of 9.470x with a market capitalisation of $698.07 million. Over the past 12 months, the stock has declined by 10.15% despite a positive price change of 31.60% in the past three months.
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