Hub24 Limited (HUB)
BUY

Market boost

 18 Jul 2023
Sector: Financials

Q4 TRADING UPDATE

Need To Know

  • 4Q23 FUA was in line at the headline level, but largely due to better-than-expected market performance
  • Net inflows of $2.1bn were below market expectations, with the continued off-platform trend driving a sharp uplift in outflows
  • Adviser additions through the quarter were up and HUB continues to take market share (6.05% vs 5.1% in March 2022)
  • We retain our Buy rating, although expect the slower net inflows to weigh on the stock performance

Investment Implications

Q4 Custodial FUA of $62.7bn was up 26% yoy and in line with expectations of $62.6bn. This was driven by $4.6bn in gross inflows (+9%yoy) however offset by $2.5bn of outflows (+41%yoy) as advisers continue to shift assets off platform (including term deposits and alternative assets).

Total advisers grew 15% on the pcp to 4,011 and 28 new distribution agreements were signed. HUB was also ranked equal first for Overall Satisfaction in the 2023 Wealth Insights Platform Service Level Report.

Class continues to deliver product enhancements and grow its accounts by 1.9% yoy. The myprosperity acquisition completed on 30 May 2023, and since completion, HUB noted that 'additional opportunities to leverage the combined capabilities of the group' have been discovered.

Investment View

We continue to like the building blocks HUB is putting in place to maximise its chance of winning more share in the market of the platform. The weaker performance in net inflows into the platform over CYTD is a result of a cyclical trend across the industry, not structural in our view. The expected addition of ~$4bn of Equity Trustees FUA over the next 12-18 months 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.

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Stock Overview

Share Price

Company Overview

HUB is a financial services company that offers investment and superannuation platforms, portfolio management, and data solutions to financial advisers, stockbrokers, accountants.

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