The Hub24 Ltd (ASX: HUB) share price is on watch today after the fintech announced its December 2020 quarter.
Hub24 is a fintech which has a platform that offers advisers and clients a range of investment options, including managed portfolio solutions and quality transaction and reporting functionality.
Here’s what Hub24 said
Hub24 revealed that its custodial platforms funds under administration (FUA) was $22 billion at 31 December, which was up 38.7% and total FUA was $31 billion.
The fintech ASX share said that it saw record platform quarterly net inflows of $1.7 billion, which was an increase of 36.7%, or $360 million, compared to the September quarter.
Hub24 said that the continued industry trend towards specialist platforms and Hub24’s position as a market leader in managed portfolios, reputation for innovative product solutions and customer service excellence were key reasons for the strong net inflows for the quarter.
Hub24 reminded investors that it completed the Ord Minnett Portfolio Administration Reporting Service (PARS) acquisition in November. The proposed Xplore Wealth acquisition is progressing well with first court hearing completed in December.
The company also executed the transaction implementation deed, technology partnership agreement, and Paragem share sale agreement for Easton transactions in December.
To fund those acquisitions, Hub24 carried out (and has completed) a $50 million institutional capital raising and a $20 million share purchase plan capital raising.
Can the growth continue?
Hub24 said that the new business pipeline continues to grow with 24 new licensee agreements signed during the December quarter, with both large boutique licensees and self-licensed practices. It has also entered into a binding heads of agreement with IOOF Holdings Ltd (ASX: IFL) to develop a range of solutions, including an investment and superannuation wrap platform utilising Hub24’s custody, administration and technology capabilities and a suite of managed portfolios.
Summary thoughts
Hub24 is making a lot of decisions that could lead to outsized profit growth in the next few years. The company is making the most of the fallout from the Hayne Royal Commission.
My main concern is valuation – it’s priced at well over 100 times its earnings. There’s so much expectation. There are other ASX growth shares in the financials space I’d rather buy like Magellan Financial Group Ltd (ASX: MFG).
