AJ Bell plc (LON: AJB), one of the UK’s largest investment platforms, has today issued a trading update in respect of its financial year ended 30th September 2019.
Performance overview
Total customer numbers increased by 17% in the year to 232,066, with total assets under administration up 13% to £52.3 billion. In comparison, the FTSE All-Share index decreased by 2% over the year.
AJ Bell’s growth during the year was driven by the platform business:
· Platform customers increased by 34,956 to 218,169, up 19% in the year
· Platform AUA increased by 16% over the year to £44.9 billion
o Advised Platform AUA up 13% to £33.8 billion
o D2C Platform AUA up 28% to £11.1 billion
· Underlying platform inflows, representing organic growth in the year, increased to £5.4 billion (2018: £5.2 billion)
Andy Bell, Chief Executive Officer at AJ Bell, commented:
“Our first full year trading update since the IPO demonstrates the resilience of our business model. During periods of unsettled markets and political uncertainty customers have a greater need for established, trustworthy businesses offering high quality service, at low cost to meet their evolving investment needs. This has enabled us to continue to add customers and assets to the platform.
“Platform customer numbers continued to grow strongly, up 19% over the year and platform assets under administration increased 16%, despite a 2% fall in the FTSE All-Share. Underlying platform inflows remained robust at £5.4 billion and transfers from defined benefit pensions added a further £0.9 billion.
“The long-term growth drivers of the platform market remain strong with customers increasingly looking to take control of their long-term savings with flexible, low-cost, online solutions. This, coupled with our strong customer retention rate, positions us well to achieve our organic growth ambitions.”
Notice of annual results
AJ Bell will be announcing its full results for the year ended 30 September 2019 on 5 December 2019.
finnCap Group plc financials analyst Nik Lysiuk wrote:
AJ Bell, 371p, market cap. £1516m
One of the largest UK platforms for both advisers and individual investors
Continued strong flows – don’t be short
News. Trading update for financial year ended 30 September 2019 states customer numbers up 17% with AUA up 13% to £52.3bn. Advised platform AUA grew 13% to £33.8bn and D2C was up 28% to £11.1bn. Platform net flows amounted to c.14% of opening platform AUA.
Estimates. Consensus PBT to September 2019E expected to reach £37.4m on revenues of £104.3m, up 32% and 16% respectively over September 2018A. AUA comes in as expected, and is set to grow 9.7% into September 2020E, resulting in PBT growth of 17%.
Valuation. EV/AUM of 2.8%. Shares trade on an 2020E P/E multiple of 42x with a dividend yield of 1.6%. An almost £2bn company that is destined for continued growth.
What’s interesting? Close your eyes if you like value, but on a long-term horizon, it’s still a buy. I’ve spoken to some investors that have considered shorting this stock on valuation alone. Such a view completely misunderstands the strength of the underlying drivers in this sector and besides, people were saying the same about Hargreaves at 10p. If you want a platform that is yet to achieve scale and trades on c.1% EV/AUA then look at Nucleus which is where the potentially larger longer term growth opportunity is. Tatton also gives very similar exposures and is totally undervalued.
