Diversified Financials Outlook for 2018 – Lafitani Sotiriou

Bell Potter

Our Diversified Financials analyst, Lafitani Sotiriou discusses his top stock picks by breaking it up into three leaders and three emerging companies for your consideration in 2018.

Leaders

BT Investment Management (BTT)

BTT is a globally diversified multi asset funds management business that is continually evolving its offering to win new fund flows. BTT enters 2018 trading on ~16x FY18 PE, and we expect the company to achieve 20%+ EPS growth during the period. The company is set to benefit from both higher performance fees, and a greater base management fee, with the company well placed to exceed $100 billion in Funds Under Management (FUM) over the year ahead. BUY, Price target $15.20

Challenger (CGF)

CGF is Australia’s largest annuities provider, and is arguably at the forefront of retirement product innovation in Australia’s Superannuation sector. CGF is well placed for a strong 2018; with the MS Primary relationship expected to gain further scale, and the forthcoming rollout of CGF annuities on AMP and BT platforms anticipated to further grow CGFs distribution footprint. We remain confident CGF remains on track to bolster its product offering, with the ramp up of deferred lifetime annuities expected to support sales growth during FY18. BUY, Price target $15.75

Janus Henderson Group (JHG)

JHG is a large diversified global fund manager. Following the merger of Janus capital and Henderson group, the group has seen a marked turn around with the earlier than anticipated return to positive net-flows, and improved performance across a number of funds. JHG remains a top pick, as we expect to see the company achieve double digit EPS growth, and deliver material cost saving and revenue synergies over 2018. BUY, Price target AU$63.00

Emerging

Afterpay Touch Group (APT)

APT is one of Australia’s fastest growing fintech companies, which has in the last year added over 1m new users and signed merchant deals with a number of the largest retail outlets and brands in Australia. On its current trajectory APT is set to record its first profitable year in FY18, however we believe the company has no shortage of opportunities in the pipeline in the lead up to 2018. With the possibility of further geographic expansion and collaborative efforts in the future, we believe Afterpay’s offering should be considered amongst the likes of Paypal and MasterCard. BUY, Price target $7.30

OneVue Holdings (OVH)

OVH is a leading Australian Superannuation Administrator which has 3 integrated and product offerings across Super & Managed Fund Admin, Superannuation Trustee, and Platform services, all of which are profitable. With improving cashflow generation and a robust net-cash position we believe OVH is well placed to capitalise on a number of prospective opportunities to help accelerate growth in 2018. BUY, Price target $1.10

Praemium (PPS)

PPS has been exhibiting strong organic growth in both its Australian and International platform businesses, underpinned by improving net-flows. This growth has provided PPS with the ability to scale profitability in its Australian business, and continues to drive momentum in the international business. With a number of organic and inorganic growth opportunities available to PPS we anticipate the company will continue to benefit from its ability to scale platform FUA and we expect PPS to re-rate as the international business reaches breakeven in 2018. BUY, Price target $1.00


About this contributor

Bell Potter

Bell Potter

, Stockbroker

Bell Potter is a member of the Bell Financial Group (BFG) of companies. We are one of Australia's largest full service stockbrokers and a leading financial advisory firm, offering a full range of services to private, corporate and institutional...

Expertise

ASX:CGF ASX:BTT ASX:PPS ASX:OVH ASX:JHG ASX:APT

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