Author: Aayushi Swami

Categories
Global stocks Sectors

Perpetual Ltd. Asset under Management increases by 246% over pcp to $98.3 bn

Investment Thesis:

  • PPT is a business having vast diversification, with earnings obtained from trustee services, financial advice and funds management.
  • PPT has a chance to increase FUM (Funds Under Management) through its Global Share Fund, which has a strong performance track record over 1, 3 and 5-years and significant capacity. 
  • PPT maintains FUM in Australian equities, which is of maximum amount. This equates to levelled earnings growth unless PPT can attract FUM into international equities, credit and multi-asset strategies (and other incubated funds).
  • Inflow of funds from retail and institutional investors are expected to be high especially from positive compulsory superannuation trend and Perpetual Private. 
  • Perpetual Private’s high potential to ramp up growth in funds under management and funds under advice.
  • Process of cost improvements in Perpetual Private and Corporate Trust.

Key Risks:

  • Probability of any significant underperformance across funds.
  • Key man risk surrounding key management or investment management personnel.
  • Probability of change in regulation (superannuation) with major interest on retirement income (annuities) than creation of wealth.
  • The average base management fee (bps) annually (excluding performance fee) continues to be stable at ~70bps but there are risks caused due to drawbacks from pressures on fees.
  • The provision of financial advice and Perpetual Private adjoins more regulation and compliance costs.
  • Industry funds, which are building in-house capabilities (~15-20% of total PPT funds under management), have good exposure.

Key Highlights:

  • The operating revenue increased +31% and underlying profit after tax was up +26% post the acquisition of Trillium and Barrow Hanley.
  • Statutory NPAT decreased -9% because of the significant one-off costs.
  • PPT’s assets under management increased by +246% over pcp (previous corresponding period) to $98.3bn, wherein significant amount of funds outperformed their respective benchmarks over the year.
  • Fully franked final ordinary dividend of A$0.96 per share was declared, thereby amounting the total FY21 dividend to A$1.80 per share, which is up +16% over pcp.
  • Perpetual Asset Management Australia delivered total revenue of A$165.7m, which was down -5% over pcp.
  • Perpetual Asset Management International (new international division comprising the Trillium and Barrow Hanley businesses), had total revenue of A$139.2m and underlying profit before tax was A$40.7m.
  • Perpetual Private delivered total revenue of $183.8m, relatively unchanged over pcp and underlying profit before tax of A$35m.
  • Perpetual Corporate Trust delivered total revenue of $134.9m, up +7% over pcp and underlying profit before tax of A$63.8m, which was +9% higher over pcp.

Company Profile:

Perpetual Ltd (PPT) is an ASX-listed independent wealth manager with three core divisions in Perpetual Investments (one of Australia’s largest investment managers); Perpetual Private (one of Australia’s premier high net worth advice business); and Perpetual Corporate Trust (which provides trustee services). PPT looks after ~$98.3 billion in funds under management, ~$17.0 billion in funds under advice and ~$922.8 billion in funds under administration (as on 30 June 2021).

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.