Hub24 Limited (HUB)
BUY

FUA Booster

 19 Apr 2023
Sector: Financials

3Q23 RESULT

Need To Know

  • Total FUA increases by $3.9bn to $76.9bn
  • Tougher flows environment in 3Q23 
  • EQT deal boosts confidence in FUA guidance

3Q23 platform net inflows weaker: HUB reported Total Funds Under Administration (FUA) of $76.9bn, which comprises Platform FUA of $59.4bn (+17% y/y) and Portfolio, Administration & Reporting Services (PARS) FUA of $17.5 billion (+1% y/y). 

HUB saw weaker net inflow (-29% y/y) reflecting the macro uncertainty and industry trends evident over the past 6 months. The recent pause/imminent end of interest rate hikes is likely to facilitate the recovery of net inflows over the medium term. 

EQT deal to add $4bn to FUA over next 18 months: HUB has entered into a Heads of Agreement with Equity Trustees Limited (EQT) to provide custodial platform administration and technology solutions to EQT and AET trustee services. 

The agreement covers that there will be a phased approach to transferring A$4bn of FUA (+6%) over the next 18 months. The EQT deal should improve the group’s overall revenue margin and provide the market with confidence that HUB can achieve its FUA target guidance of $80-89bn in FY24. 

Investment View

The weaker performance in net inflows is a result of a cyclical trend. The pause in interest rate increases and the benefits from the EQT deal reinforces our view that HUB’s value proposition and competitive advantage, as well as its ability to offer a range of solutions for advisers, will drive growth in FUA-based revenue and 'Platform-as-a-Service' revenue streams. We rate HUB a Buy.

Figure 1: HUBs on target to hit its FUA guidance of $80-89bn in FY24

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Stock Overview

Share Price

Company Overview

HUB24 Limited is an Australia-based provider of integrated platform, technology, and data solutions. The Company provides technology and data services through HUBconnect Pty Ltd (HUBconnect) and Agility Applications Pty Ltd (Agility).

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