Morningstar

Morningstar, Inc.

Equity Bottom-Up

We maintain our AUD 5.50 per share fair value estimate for Netwealth following the release of fourth-quarter funds under management and administration, or FUMA, data. Despite a 32% increase in FUMA to AUD 27 billion in fiscal 2019, growth was largely in line with our 30% forecast and we have maintained our earnings forecast. FUMA growth slowed from 45% in fiscal 2018 and we expect growth will continue slowing down to 25% in fiscal 2020 as the business matures. Despite falling 20% over the last…

Netwealth’s quarterly result was broadly in line with our forecast for AUD 27 billion in FUMA by fiscal year-end, which implies a 30% increase on the prior year. We continue to expect Netwealth to experience fee compression, due its lack of an economic moat and a gradual slowing in FUMA growth over the next decade. However, operating leverage should enable strong EPS growth, and we forecast a relatively strong EPS CAGR of 15% over the next decade. We have maintained our fair value estimate at…

<p>We have maintained our earnings forecasts and AUD 5.30 fair value estimate for Netwealth following its secondquarter trading update which was in line with our expectations. Funds under management and administration, or FUMA, fell by 1% versus the prior quarter but were impacted by particularly weak equity markets, including a 9% fall in the S&amp;P/ASX 200 index. Excluding market movements, FUMA grew by 4.8%, versus the prior quarter but we expect the 15% fall in net FUMA inflows was the main cause…</p>

<p>Netwealth continues to generate strong asset growth, but the 8% increase in funds under management and administration, or FUMA, in the first quarter to AUD 22 billion was in line with our forecasts. We expect strong FUMA growth to continue but at a moderating rate as the business matures. Although current FUMA is up 42% over the past 12 months, this includes two particularly strong quarters and we continue to expect a 30% growth rate over fiscal 2019. Importantly, we also expect fee compression…</p>

Australia

Netwealth Group Limited provides investment management services. The Company offers portfolio management, insurance, advisory, and investment solutions. Netwealth Group focuses on funds, deposits, accounts, cash, and securities. Netwealth Group serves customers in Australia.

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