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Why the Netwealth (ASX: NWL) share price rallied 3.53% (Quarterly update)

This article was originally published at MF & Co. Asset Management.

Why the Netwealth share price rallied 3.53% (Quarterly update)

Netwealth Group Limited (ASX NWL) released its business update for the June 2019 quarter. The NWL share price rallied 3.53% to $7.630 off the back of the news.

The company reported record annual inflows following a robust final quarter in June 2019. According to statistics, the company increased its market share as at March 2019 by 0.2% to 2.5%.

About Netwealth Group Limited

Founded in 1999, Netwealth is a fast-growing wealth management business in Australia. Netwealth offers a range of innovative portfolio administration, superannuation, retirement, investment and managed account solutions to investors and advisers.

Robust inflows

In the June quarter Netwealth received net inflows of $1.5 billion, and the tally for FY2019 amounted $4.3 billion, according to the quarterly update.

The company also had strong inflows (the highest in the industry, according to Strategic Insights) during March 2019 quarter of $0.9 billion and during the 12-month period ended March 31, 2019, of $4.3 billion.

Net fund flows are clearly skewed in favour of NWL as seen in the market snapshot below.

Netwealth Group(ASX NWL)-market snapshot

Funds Under Administration (FUA) surge higher

As at 30 June 2019, FUA including Managed Account leaped higher by $1.1 billion (+38.7% for the FY) to $3.9 billion. Managed Account as at June 30 rose $0.9 billion (+50.4% for the FY) to $2.8 billion.

Netwealth Group(ASX NWL)-managed account

Market standing

The company stated it continued to gain market share even while keeping intact sustainable margins. Its market-leading platform is a huge advantage and NWL is confident of “continued FUA growth and has a strong pipeline of new business including new clients in the process of being transitioned during FY2020 and thereafter.”

Netwealth Group has received multiple awards for its platform. It won the ‘Advised Product of the Year’ for the second year in a row at the 2019 Chant West Super Fund Awards. At the Momentum Media SMSF awards, it was recognized as the SMSF platform provider of the year.

In the Investment Trends April 2019 Planner Technology Report Netwealth came in at #1 for overall user satisfaction for the eighth consecutive year.

Netwealth Group was also ranked #1 in overall platform ranking from Investment Trends Benchmarking Report.

The company continues to focus on web and reporting enhancements. It also added Challenger annuities to its platform.

Our takeaway

At $7.630 the NWL share price is down from its 52-week high of $10.11.

However, on the valuation front, it is very expensive compared to its sector peers.

Netwealth Group (ASX NWL)-valuation

However, given the rapid improvement in FUA, and its reputation amongst the user base, the outlook for the company may be considered as positive in the long term.



Categories: Australian Stocks

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