We covered the investment platforms FY21 result during the week however we had the chance to talk to the new CEO Anthony Wamsteker yesterday. The result was weaker than expected, the stock fell sharply then recovered – why? The big concern was margins – Praemium revenue margins were reasonably stable and we expect them to hold around the ~33bps level, however during the year, they bought Powerwrap which operates a lower margin business, more like ~20bps with management conceding this will be difficult to change, so we expect bigger volumes but lower margins which is a trend across the industry (good for consumers). More broadly, investment in the business was up in the half with work being done to bolster their technology, sales & marketing though this jump looks to be a one-off. The international business is for sale and has some suitors, though the management team were very hesitant to put a number on it, they noted market estimates had the range about right, putting it somewhere in $40-120m (big range!). On settlement they may look to acquisitions of their own, or look to distribute to shareholders. All-in-all we remain positive with the outlook.
MM remains bullish PPS
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