Why Netwealth’s (ASX:NWL) share is on an upward trajectory

  • January 21, 2021 08:41 PM AEDT
  • Hina Chowdhary
    Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

Why Netwealth’s (ASX:NWL) share is on an upward trajectory

Summary

  • Investment technology provider reported a sharp growth in Funds Under Administration (FUA) over the December quarter.
  • The company provided guidance on FY21 FUA net inflows in the range of AU$8.5 billion to AU$9.0 billion for FY2021.

The Netwealth Group Ltd (ASX:NWL) share price skyrocketed Thursday morning after the company released its second-quarter update on ASX. The investment platform provider updated a robust growth during the quarter, adding AU$4.8 billion in investor funds. After a pleasing announcement, investors seem to be buying Netwealth shares as the stock was S&P/ASX 200 index's second-best performer after Z1p Co. on Thursday morning.

Investment technology provider reported that its Funds Under Administration (FUA) grew to $38.8 billion at the end of December 2020. An increase of AU$4.8 billion or 14% increase on quarterly scale is a massive milestone. The growth reflects Netwealth's successful trajectory during the coronavirus pandemic. The FUA net inflows of AU$2.6 billion was recorded for the December quarter, an increase of 3.7% over the first quarter.

The company stated in the release that favourable market movements and recovery in financial markets were key drivers of the growth. Notably, the company reported FUA net inflows of AU$9.2 billion for the 2020 calendar year. It represents a 36.1% growth compared to the 2019 calendar year.

Image Source: Shutterstocks

Consistent growth through the pandemic:

Netwealth offers an ecosystem for investors at a time when wealth professionals expect benefits from the industry's ongoing changes. In terms of its FUA size, the financial planning platform provider believes that it is the fastest growing platform operator in the market. The company had recorded the largest FUA net inflows of AU$9.5 billion for the 12-month rolling period ending 30 September 2020, representing the largest FUA recorded in the industry for the 10th consecutive quarter.

Netwealth was recently announced as a Top-200 company in the 2020 Forbes Asia “Best Under a Billion” award ceremony. The award ceremony recognises companies that have less than US$1 billion in revenue and demonstrates growth. Netwealth was acknowledged for its consistent growth, low debt, and strong governance.

The managed account balance is also growing strongly reaching at AU$7.6 billion at the end of December 2020. The company reported an increase of AU$3.2 billion or 74.1% increase in the managed account balance compared to the corresponding prior period. Finally, Netwealth's managed account net flows reached AU$3.2 billion at the end of the 2020 calendar year. It is an increase of AU$1.2 billion or 63.9% compared to the 2019 calendar year.

For the financial year 2021, the company informed investors regarding the strong pipeline of new business and transitions. Netwealth also provided guidance on its FUA net inflows. The company expects it in the range of AU$8.5 billion to AU$9.0 billion for FY2021.

On 21 January 2021, the Netwealth Group Ltd (ASX:NWL) share price closed 11.72% up from the previous close at AU$17.730.

 

 


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