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Netwealth Group Limited, consistent top and bottom line growth

Team Veye | 25 Jan 2021 ASX - NWL
Netwealth Group Limited, consistent top and bottom line growth

Netwealth Group Limited (ASX: NWL)

Netwealth Group Limited (ASX: NWL)

The company Netwealth Group Limited (ASX: NWL) on 21 January 2021 provided a quarterly business update for December 2020.

Quarterly highlights and outlook

  • As of 31 December 2020, Funds under Administration (FUA) recorded an increase of $4.8 billion or 14% to $38.8 billion. This also includes the market movement of $2.2 billion. An increase of $10.3 billion (36.1% increase) to PCP1 including the positive market movement of $1.1 billion.
  • FUA net inflows reported a 33.7% increase over the first quarter. The net inflows increased from $0.6billion to $2.6 billion for the December quarter
  • FUA net inflows for the 2020 calendar year reported at $9.2 billion, an increase of $2.4 billion (36.1% increase) to the 2019 calendar year.
  • As of 31 December, 2020 Funds under Management (FUM) were at $9.3 billion, an increase of $1.3 billion (15.5% increase) for the December quarter.
  • For the quarter, FUM net inflows of $0.7 billion and market movement of $0.5 billion.

(Chart source: TradingView)

  • Managed Account balance increased by 3.2 billion or 74.1% to $7.6 billion at 31 December 2020
  • Managed Account net flows increased by $1.2 billion to $3.2 billion for the 2020 calendar year, an increase of 63.9% from the 2019 calendar year.
  • Implementation of the new product pricing announced in March 2020 on 1 January 2021. A progressive client movement is noticed ever since the announcement was made.
  • Netwealth expects to benefit from ongoing industry consolidation and change.
  • For FY2021, the pipeline of new business and transitions remains strong. The FY2021 FUA net inflows are expected to be in the range of $8.5 billion to $9.0 billion, an increase on previously advised expected annual FUA net inflows of $8.0 billion
  • The balance of the Netwealth Cash transaction account was 7.2% of FUA on 31 December 2020.
  •  FUA per account has increased to $440,000 on 31 December 2020 up from $378,000 on 31 December 2019.
  • . Member accounts at 31 December 2020 of 88,189, an increase of 3,455 accounts (4.1% increase) for the quarter.

(Graphic Source – Company Reports)

Platform growth and performance

  • Netwealth recorded the largest FUA net inflows of $9.5 billion for the 12 months rolling period to 30 September 2020, the largest in the industry for the tenth consecutive quarter and a record level of flows for Netwealth for a 12 month period.
  • Netwealth is the fastest growing platform operator by net inflows over the 12 months to 30 September 2020, with 38% growth in absolute terms and relative to the size of FUA
  • Netwealth recorded the largest quarterly FUA net inflows of $1.9 billion for the September 2020 quarter
  • 7th largest platform provider in the market with a market share of 4.1%, up 1.2% for the year to 30 September 2020
  • 34.4% increase in FUA for the year to 30 September 2020. (Data Source – Company Reports)

 

Veye’s Take

Netwealth expects to benefit from ongoing industry consolidation and change. For FY2021, the pipeline of new business and transitions remains strong. NWL FUA net inflows are well diversified with the largest transition accounting for approximately 18% of the quarterly net inflows. The stock has taken the support of the lower band of the Bollinger after making the” Lower Low” formation on the price charts. RSI has just turned positive, supporting the upside move. MACD crossover is about to begin. The stock price is above the middle band of the Bollinger. Levels near $17.95-$18.17 are strong resistance zone. Veye maintains a ”Hold” on “Netwealth Group Limited” at the current price of $17.75

Disclaimer

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