Shares of Aussie financial services company HUB24 Ltd [ASX:HUB] are well in the green this morning, climbing 8.5% higher in the first 30 minutes of trading.
At time of writing, the HUB24 share price is sitting at an even $12, having already gained 94 cents since market close yesterday.
HUB24 operates their own investment and superannuation platform, providing financial advice to clients through its wholly owned licensee group Paragem.
The company also provide technology and application products through their subsidiary, Agility Applications, which currently services around 45% of the Aussie stockbroking market.
HUB24 released their FY19 results this morning before market open, revealing strong growth in the company for the year.
Standouts include a 27% increase in Underlying NPAT, a 30% increase in Underlying EBITDA, and a 52% increase in Underlying Platform EBITDA.
The strong performance has led the company to declare a second half dividend of 2.6 cents per share, bringing their full-year dividend of 4.6 cents per share, up 31% from FY18.
Investors are clearly pleased by the results.
Goldman Sachs tipped this weeks ago
At the end of July, Goldman Sachs analysts tipped HUB24 as a company that could see their share price soar in August.
A note from the broker said:
‘We believe the market is focused on HUB’s poor track record of meeting earnings expectations and the expected 2H skew to its earnings…however, volumes reported [recently] were ahead.’
And while HUB24 shares did fall as low as $10.37 earlier this month, today’s results do in fact reflect the promise of growth in the company that Goldman was betting on.
HUB24 is still the fastest growing platform provider in percentage terms.
There was clear intent on growing HUB’s ‘distribution footprint’ in FY19, with 84 new licensee agreements, which helped reach record annual net inflows of $3.9 billion, up 61% from FY18.
The company stated:
‘As more financial advisers move away from institutions and the demand for choice, value and market-leading platforms increases, the contestable market for HUB24 is expanding.
‘The opportunity for growth is now significantly larger and in FY20 HUB24 will be making further strategic advancements to capture growth.’
While cash flow from operating activities was down slightly in FY19 ($11.6 million compared to $12.2 million), part of this was the results of an increase in receivables due to the increase in size of the platform business.
HUB24 are therefore optimistic about the future, and have increased their FUA target by $3 billion to the range of $22–26 billion by the end of FY21.
A leader in an up and coming sector
As outlined in HUB24’s analyst pack, the rise of specialist platforms (SPs) in the wealth management industry is causing traditional institutional platforms — like the big four banks, AMP and Macquarie — to lose market share.
In the last five years, SPs have increased their market share from less than 1% to over 5%.
The new technology these SPs are utilising is allowing greater flexibility to users, and there are no in-house legacy systems inhibiting innovation which are present in institutional providers.
Here at Money Morning, we’re well and truly on the fintech train, and are excited about the big changes taking place in this sector.
If you want a closer look at this company, as well as the potential of fintechs as an investment opportunity, download this free report now.
For Money Morning