Reviewing the acquisition of ANZ Wealth Management, think the company will end up - even without any gains in the level of the market over the next 2 years (when ANZ Wealth will be fully integrated) , or any additional organic inflow of funds into IOOF's platforms - the company will be generating Underlying NPAT of around $270m (cf. FY2017's ~$170m in UNPAT).
Add in the likelihood of modest market movements of, say 5% pa, as well as a few billion more pa in fund inflows, and you quite easily get to UNPAT of $300m.
On the expanded issued capital base of 352m shares, that equates to EPS of 85cps.
Meaning anyone buying shares in IOOF today is doing so on a 2-year prospective P/E of somewhere between 11.0 and 11.5x.
Both in an absolute sense, and also relative to the overall market, I cannot recall seeing IFL ever being valued as cheaply.
Accordingly, a high conviction investment for me, and now one of my Top 10 largest holdings.
IFL Price at posting:
$9.59 Sentiment: Buy Disclosure: Held
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