IFL report was not great.MLC purchase was complete and both...

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Beachcomber4

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01/10/21

12:10

Post #: 56497057
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Originally posted by gragou02: ↑

Can someone tell me why IFL keeps dropping

There was a strong drop in the SP back in the early part of 2020 when the price dropped below $3 for a short period. Since then the price has slowly recovered and has recently meandered between $4 and $4.50.
This lack of direction in the price can, I think, be put down to the fact that there is no comfort in the eyes of the institutions, or anyone else for that matter, as to what this company will be worth going forward.

The reason for that is convoluted but essentially began when the Royal Commission came along and made substantial changes to the Investment Advisory business. The number of changes are too many to detail here but suffice to say it carved a big hole in the industry business model and caused a lot of the big players to head for the Exits. (Not being able to charge dead people for advice not given, seemed to be a bit of a bummer).

But rather than leave the game with the others, IFL decided to buy out a couple of the “exiters” to become just about the biggest funds manager/advisor in the country. The plan would be to enable the economies of scale that ensue from the takeovers to overcome the probable reduction in revenue resulting from the rule changes.Well, that’s the plan and it may well work.

The problem is that it’s not clear yet and won’t be for some time.

The first issue is that much of the costs linked to the transition have occurred early in the transition process while the benefits of the acquisitions won’t be seen for some time to come. And some elements of the business which had previously contributed profit are now discontinued as management seeks to streamline the business.

This issue is made more discomforting because the share value has been diluted after the allocation of shares to pay for the two acquisitions means that future profits will be distributed across 649m shares rather than 351m shares prior to the acquisitions.

Trying to measure the likely outcome of the transition based upon the 2021 financial results proved to be next to impossible. The statutory result reflected a loss of $142m compared to the profit for 2020 of $142m.

When the results were normalized the 2020 result reflected a profit of $128m while the 2021 result showed a profit improvement to $148m.But even working with the normalized result isn’t conclusive given that the 2020 result contained only 7 months of input from the ANZ takeover while 2021 had 12 months of benefit from the ANZ. The 2021 result also included one month of NAB income while 2020 of course didn’t contain any.

So an evaluation of a reasonable SP after the merge is completed will continue to be clouded because costs of the merge are still being incurred while the benefits of the merge are still to come to fruition.I heard the CEO being interviewed recently and in response to a question about when a real understanding of the outcome of such major changes would be known and better understood, he suggested that it’s not likely to be readily visible inside the 2022 accounts but that the full 2023 year will be the first time the picture becomes really clear.

I might add that he presumably has a clear picture of the future now while it’s the 2023 accounts which will provide the first insight for the external investors.

So I would not expect the SP to provide a strong path in any direction for quite a while.

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IFL report was not great.
MLC purchase was complete and both entities traded only for 1 month before EOFY.
Next report will be better and include MLC earnings / profit.
My forecast EPS IS
21.08 CPS jUNE 21
35.1 cps June 22
41.6 cps June 23

Remember, it takes time to bake a cake!

If you cant wait sell now!

IFL Price at posting: $4.13 Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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Last $3.45		Change 0.010(0.29%)		Mkt cap ! $2.314B

Open	High	Low	Value	Volume
$3.45	$3.48	$3.42	$2.954M	855.3K

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No.	Vol.	Price($)
3	32716	$3.45

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Price($)	Vol.	No.
$3.47	500	1

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No.	Vol.	Price($)
3	32716	3.450
3	10099	3.440
3	16519	3.430
2	31886	3.420
1	13314	3.410

Price($)	Vol.	No.
3.480	13338	3
3.490	22704	7
3.500	10711	4
3.510	6886	1
3.520	15256	3

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IFL (ASX) Chart

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