PAC v PNI - PAC is undervalued comparative to similar company

Hi All

I have done a rough comparison between PNI and PAC to show what I believe PAC to be valued at.  I don't believe PNI is significantly over valued, but believe PAC should be comparative in value as follows:

Share of the FUM and revenue for both companies

Here is the Share of the FUM as at June 2018

Two things are clear from the above tables.  They are:

1) With less FUM, PAC generates more revenue

2) FUM can grow significantly when PAC re-invests Aperio money.  PNI has similar growth trajectory, but is priced at higher multiples.  Share of the FUM has been very similar over the years (if PAC had kept Investors Mutual and RARE, FUM would be higher)

So the question is what are the comparative ratios to assess value.  Let's look at the following:

PNI NPAT 2018=$23.4M 2017=$13.1M

PAC NPAT 2018=$17.8M 2017=$16.6M (normalised, excludes sale of assets)

PNI's market capitalisation, 180.801M shares @ $5.33 is $963.67 Million

PAC's market capitalisation, 47.642M shares @$5.90 is $281 Million

PNI dividend is 11.6c (across 2 payments) or 2.17% dividend yield

PAC dividend is 22c (across 1 payment) or 3.72% dividend yield

If PAC Dividend Yield was the same as PNI, share price would be $10.14 (22c/2.17%)

If PNI Dividend Yield was the same as PAC, share price would be $3.12 (11.6c/3.72%)

PNI's NPAT to Market Capitalisation ratio is 41 times ($963.67M/$23.4M)

PAC's NPAT to Market Capitalisation ratio is 15.8 times ($281M/$17.8M)

If PAC ratio was the same as PNI, PAC market cap would be 17.8*41= $729.8 Million or $15.31 per share

If PNI ratio was the same as PAC, PNI market cap would be 23.4*15.8=$369.72 Million or $2.04 per share

Understand there is negative sentiment around PAC and its management team, but above shows there is upside comparative to a similar company listed on the ASX that perform relatively closely.  While share price may not reach as high as PNI due to sentiment, there is merit in share price getting closer.  Consistent dividends (pay twice per annum), continuing to invest in high growth fund managers and high ROI will restore value, despite market volatility.

In a worst case scenario, the above makes the case PAC shares should not fall much further in price.

Best of Luck

Lost