Hub24 Ltd (ASX: HUB) shares will be on watch today after announcing its September 2020 update.
Hub24 September 2020 quarter
Hub24 revealed that its funds under administration (FUA) reached $19 billion at 30 September 2020, up 32% compared to the prior corresponding period (PCP).
It saw a strong increase in net inflows for the September quarter, up 10% on the PCP to $1.36 billion. This also represented an increase of $260 million from the June 2020 quarter. Management said this demonstrated the strength of the business since the initial impact of COVID-19.
The HUB24 platform saw its market share increase to 2.1%, up from 1.5% at June 2019, and it maintained second place for both the quarterly and annual net inflows according to the latest available Strategic Insights data.
HUB24 boasted of a continuing business pipeline, with 27 new licensee agreements signed during the quarter and 101 new advisers using the platform.
The fintech business said it’s confident that the new business pipeline will continue to grow as additional opportunities emerge given adviser movement from institutional licensees and further industry consolidation.
HUB24 also said that as the market leader in managed portfolios, HUB24 continues to provide advisers and their clients with investment choice. During the quarter, 15 new managed portfolios were added to the platform, which were a combination of diversified and Australian equity portfolios. It also added another 27 new ETFs to provide more options for low cost access to Australia and US markets.
Time to jump on Hub24?
There has been an elevated number of clients and advisers moving over to fintech providers like HUB24 ever since the financial services Royal Commission.
Hub24 is doing well at executing on the opportunity to capture market share and grow its FUA at a strong rate. Due to the nature of superannuation, the growth in FUA could mean long term earnings generated from each client.
I’m not surprised to see that the Hub24 share price has more than doubled over the past six months. The question is whether today’s price represents good value. According to CommSec estimates, it’s valued at 64 times the estimated earnings for the 2021 financial year. The low interest rate (which could go even lower next month) isn’t helping things.