- Full-year numbers show surge in customer numbers
- Founder and chief executive Andy Bell describes V-day log-in issues as “really disappointing”
Two headlines jump off the pages of AJ Bell’s (AJB) full-year results. Buffeted by the lockdown effect, the investment platform provider’s customer numbers rocketed 27 per cent to 295,305 in the year to September. Despite periods of immense market volatility, a client retention rate of 95.5 per cent suggests that most have stuck with the group.
Investors wondering why a banner year for engagement has not led to a major share price re-rating have two other figures to digest: a more modest 8 per cent uptick in assets under administration to £56.5bn, and total net inflows of £4.2bn.
Relative to the interim position, this clearly shows the recovery in markets and asset prices. But it also points to the cautiousness and experience of many platform newcomers, who tend to be younger than the average user.
Two recently-launched initiatives – a cash savings portal, and a popular own-brand ethical fund – could help outreach efforts, though chief executive Andy Bell is keen to keep his platform both agnostic and free of cross-selling. Customer experience remains paramount, which explains why Mr Bell described widely-reported technical issues on Vaccine Day as “really disappointing”.
On average, analysts expect earnings to dip to 8.6p per share for the year to September 2021, and 9.3p in FY2022. That does not smack as an income growth profile deserving of a forward price-to-earnings multiple of 50, though it is worth recalling a longer track record in which net income has risen £13.4m to £38.8m in the last four years.
A toppy rating notwithstanding, the shares have held up well this year, and should be well-supported by secular trends and growth plans. Move to hold.
Last IC View: Sell, 429p, 19 Aug 2020
|AJ BELL (AJB)|
|ORD PRICE:||436p||MARKET VALUE:||£1.8bn|
|TOUCH:||435.5-436p||12-MONTH HIGH:||468p||LOW: 229p|
|DIVIDEND YIELD:||1.4%||PE RATIO:||46|
|NET ASSET VALUE:||27p||NET CASH:||£70m|
|Year to 30 Sep||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|^Pre-IPO, 2018 dividend includes special.|