Pinned straw:
Looks like Praemium undergoing some recovery after large sell down from an update relating to negative EBITDA growth and cost increases
Coupled with the ongoing and relatively high rate of inflation that persists, it is expected that operating costs in this current half year will be around 10% higher than the previous half year – i.e. January to June. The one- off, non -recurring costs are expected to amount to around $1 million over the full year.
Based on the impact of these costs and the revenue margin decline mentioned earlier, we currently expect that EBITDA for the first half of FY24 will be approximately 20% lower than the corresponding half last year.
Shares down to all time low of 36c from 58c but now recovered to 44c
There is also an ongoing buyback happening.
Remember that PPS received a takeover from NWL. Would NWL be interested again? Seems interesting here given the history for anyone interested in takeover arbitrage.
The other question is who sold down the shares indesicriminately to 36c last week. Could be Vanguard being the largest holder but there hasn't been an update as yet.
I reckon Vanguard only do ETFs, not discretionary (active) managed funds, so I'd assume that whatever Vanguard hold is for their ETFs and they would be unlikely to sell a heap unless either there had been a big run on one or more ETFs that hold PPS or else PPS had been removed from an index or industry group. PPS didn't move in or out of any indices in September (see here for that announcement) and the December rebalance hasn't been announced yet. Details will probably be announced on December 1st (or 4th) for an effective date of somewhere around December 18th or 19th. But Vanguard would not make those sort of moves ahead of an announcement anyway.
PPS dropped 20.5 cps (or -35.34%) to 35.5c (from a 58 cps close the day before) on the 22nd November, the day of their AGM, as you pointed out @edgescape . And they have bounced a little, but they haven't recovered.
Their AGM Presentation didn't paint a very rosy picture. See here: PPS-2023-AGM---Chairman-and-CEO-Address.PDF
Slide 13 was designed to show that the trajectory of their Platform Revenue Margins is upward sloping (only just) however while they've managed to get some upward sloping trend lines, the actual margins are below those trendlines and are tiny - being a "Total Platform" revenue margin of just 0.25%.
The next slide (slide 14), titled "Outlook" is probably the one that did the most damage. It starts off discussing additional costs that they expect to incur in FY24 and then says that their first half underlying EBITDA is expected to be around 20% below the prior corresponding half. The market is punishing both negative guidance and also actual results that miss guidance.
I would suggest that PPS has been guilty of both in recent years - they are more likely to overpromise and underdeliver than to underpromise and overdeliver. Plenty of punters just dumped them last Wednesday based on that outlook and moved on.
There have been some "bargain hunters" picking them up at around 40cps (+/- 5c) but I wouldn't expect that recovery to be sustained unless PPS can deliver some positive news.