Update 15/06/2023
Haven't updated my valuation for a while but today's update seems to be positive for their overall growth trajectory.
UPAT guidance range of $11.3m-11.8m before performance fees. NPAT will be affected by integration costs and other one off revaluation costs and so I think overall NPAT after performance fees may end up being around $11.5m (I think they will update the market again next month after they calculate performance fees for FY23).
Using a PE of 30x as per below, gives a valuation of $3.05
Update 14/07/2022
AEF updated their NPAT guidance to $10m-$10.2m following calculation of performance fees.
Taking the mid range NPAT guidance of $10.1m and applying a PE of 30 gives a valuation of $2.69.
I am giving them the benefit of doubt that they will be able to grow their NPAT again in the coming years especially with the influx of FUM from the Christian Super merger.
Disc: Not held.
Update 16/06/2022
More detail given in this Straw
If UPAT/NPAT is likely to be flat year on year then perhaps a PE of 40 may be a bit flattering. Net inflows are still increasing and if the general market sentiment turns positive then you could see profit increasing again in future years. However, as I stated in my straw, there may need to be stark outperformance in future years for them to start collecting performance fees again.
Will just give them a PE of 30 for now and wait for more news in the future.
Disc: Not held.
Original Valuation
AEF did about $11m in NPAT in FY21 and I'm going to assume they will do around $12m for FY22. Growth is slightly slowed due to general market conditions which have impacted their FUM growth.
FY22 earnings will also be interesting as their performance fees are collected on June 30 so if their funds don't meet expected benchmarks then this could impact the amount of fees they will be able to collect and thus reduce NPAT. At the present stage no guidance for FY earnings have been given.
So assuming $12m NPAT for FY22 and giving them a PE of 40, it gives a valuation of $4.27.
I see this as a good entry price for a company which should have good structural tailwinds once market conditions become more favourable.