Tag: PPT

Perpetual has acquired 75% of Barrow Hanley for $465m along with a $265m equity raising. Credit Suisse factors in little growth in the Barrow Hanley business although there is upside if the distribution capability in the US can be refined and expanded into Europe/Asia.

Improving fund flows in April indicates to Credit Suisse that assumptions were too conservative. The broker now upgrades FY20 estimates by 2% and FY21-22 Buy 9-12%.

Funds under management totalled $26.3bn at the end of December, up 1% during the quarter. This was ahead of Credit Suisse estimates and the company has reported its first positive quarter of flows in nearly three years.

The investor briefing signalled to UBS that the Perpetual Private and Perpetual Corporate Trust divisions are well-positioned for solid growth. In comparison, prospects in Perpetual Investments remain more mixed, given a softer performance across the key Australian equity franchise.

The new CEO is actively looking for acquisitions. Citi thinks further expansion into global equities is probably on his radar. No surprise, since the core business in Australia continues to suffer.

The company has announced $1.1bn in net outflows for the June quarter. By channel, underlying outflows came from the direct & advised retail as well as institutional.

The company is due to report its first-half result on February 21. UBS will be looking for potential strategic responses to weak operating trends.

Citi analysts highlight, 2Q19 marked Perpetual’s seventh consecutive quarter of net funds outflows. A potential positive sign is that the decline moderated in the quarter, they add, against what was admittedly a tough environment overall.

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely.

At the AGM, the new CEO has outlined key priorities. Morgan Stanley believes these are sensible steps to address the strategic issues facing the company.

Morgan Stanley updates for the March quarter funds and flows. Earnings estimates and valuation are reduced by -10%.

First half results were sound, Morgans believes, and FY18 and FY19 estimates are lifted by 1-3%. The company is building a track record of consistent delivery, in the broker’s opinion.

Strong equity markets are supporting fund under management (FuM), but Citi analysts point out net inflows remain on the weak side. Compositionally there was more emphasis on lower margin assets.

September quarter funds under management were above expectations although the broker notes medium-term performance in some large strategies remains behind benchmark.

If equity markets continue to move upwards, a reasonable assumption in Citi’s view, Perpetual might outperform given its high market "beta". Otherwise, there is very little, if anything, the analysts find attractive right now.

Deutsche Bank adjusts earnings forecasts for insurers and wealth managers to allow for investment markets, FX and catastrophe claims. Headwinds appear set to persist in 2016, leading the broker to reduce the outlook for asset yields to June 2016.

Fourth quarter net fund flows missed the broker’s forecasts, but the shortfall was driven by lower-margin cash and fixed income. The significant progress the company has made on simplifying the business leaves in place the goal to remove 18% of its cost base by FY15.

PPT – BA-Merrill Lynch rates the stock as Buy, High Risk

Perpetual’s interim was broadly in line with a few outliers on either end, thanks to one-off costs and better revenue margins.

BA-Merrill Lynch rates the stock as Reinitiation of Coverage: Buy, High Risk

PPT – UBS rates the stock as Upgrade to Neutral from Sell

Following Perpetual’s AGM, UBS is incorporating Trust Co ((TRU)) into forecasts, adding 3% and 10% to FY14 and FY15 earnings respectively.

The ACCC has approved Perpetual’s acquisition of Trust Company ((TRU)). Subsequently, Perpetual has agreed to divest Trust’s 13% shareholding in Equity Trustees ((EQT)) to IOOF ((IFL)), its previous main competitor for Trust. This appears to clear the way for Perpetual to gain control of Trust.

Deutsche Bank rates the stock as Hold –

FY12 numbers were broadly as the broker expected and while it makes some changes to revenue, cost and flow assumptions, EPS forecasts and the Neutral call are unchanged.

Target $25.50 (was $23.00). Post a review Citi has lifted earnings estimates for Perpetual and the changes mean an increase in price target.

Clearly, the analysts comment, Perpetual is a business in transition, but Citi analysts caution investors shouldn’t expect too much in the short term. Both EPS and DPS estimates have been lowered with the analysts citing a lack of near term momentum. The price target rises to $23 from $21 carried by a mild increase in the stockbroker’s "spot" valuation to $27 from $26.45.

Perpetual has upwardly revised its guidance for the year, but Citi analysts don’t think investors should get too excited about it. They cite "one-offs" as a possible driver. The analysts await more details and refuse to extrapolate any of it into future years. The company reports next week.

Target $25.50 (was $32.50). Following a marking-to-market for the June quarter for the funds management sector the broker has adjusted earnings estimates and price target for the stock.

Hold rating maintained but Citi’s target for Perpetual falls to $30 from $32.50 on the back of lowered earnings forecasts. Citi sees lower volumes for Mortgage Servicing and less funds flowing in for the funds management operations. The lack of growth in FY11 has only been partly offset by restructuring cost savings, observe the analysts.