Between the threat of other platform providers undercutting IOOF significantly, the threat from the RC to vertical integration and the likelihood of grandfathered remuneration being abolished; I personally see that 30% NPAT erosion as a likely scenario.
Whether a 30% NPAT erosion is likely or not, the point is that it’s already fully priced in, and then some. In fact, in order to re-align IOOF’s PE multiple with the broader market, you would need to cut down their pro-forma earnings (after ANZWM integration) by ~45%.
So, at constant FUMAS and at the current SP, I see the possible distribution of outcomes as being rather skewed in favour of IOOF's shareholders, wouldn’t you agree?
They are essentially just bundling together a bunch of outdated legacy businesses in a rapidly changing financial planning environment. They will be left behind.
If that is indeed the case (even though it does sound like a bit of a bold statement to me), who else do you see as being “ahead of the game”, and set to benefit from future growth within the same industry?
Cheers
IFL Price at posting:
$6.84 Sentiment: Buy Disclosure: Held
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