Fund Manager Summary on Prime Financial Group Ltd (ASX:PFG)
Prime Financial Group Ltd (ASX:PFG) has demonstrated significant improvement in performance, with recent reports highlighting a 102% increase in EBITDA year-on-year and confirmation of FY25 revenue growth guidance of 15-20%. The acquisition of Lincoln Indicators is expected to contribute positively, although recent performance shows its revenue impact has been below expectations. Fund managers noted a commendable increase in revenue and earnings per share, now reflecting a robust ROE of 28%. However, the expansion of cash conversion days poses a risk, as it may affect liquidity. PFG's strategic focus includes achieving $100 million in revenue by 2028-2030 and enhancing its EBITDA margin to 30%, while managing working capital effectively. Investors should weigh these operational improvements against potential challenges from the new acquisition and cash flow dynamics.
Commentary From The Managers
There are 8 insights from 2 fund managers regarding their investment in Prime Financial Group Ltd (ASX:PFG) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Hurdle Rate
31 Aug 2025
$0.27
Summary
- Hurdle Rate updates on Prime Financial Group Ltd's performance, highlighting a 21% increase in revenue and a 37% increase in earnings per share.
- The reported incremental ROE of 28% indicates efficient use of equity, raised at a slight premium to book value.
- Most of the profit from the recent acquisition has yet to be reflected in the accounts, as noted by Lincoln Indicators.
- Lockup days have expanded from 130 to 153, leading to weak cash conversion for the year.
- Prime has identified working capital as a near-term focus and aims for a $100m revenue target by 2028-2030, with a new 30% Underlying EBITDA margin target.
- The business has $1.3m of tangible net assets, including $8m of liquid assets, offset by $4.7m of contract liabilities, presenting an ideal funding source.
- Since consolidation, it has generated $1.5m of revenue and $0.4m of profit before tax in 10 weeks, though annualised figures fall short of expected revenue contributions.
- Despite initial results, Hurdle Rate remains skeptical about the long-term acquisition rationale but acknowledges a reasonable start.
Hurdle Rate
30 Apr 2025
$0.23
Summary
- Hurdle Rate updates their investment thesis on Prime Financial Group Ltd.
- Prime Financial has acquired Lincoln Indicators, a research house and managed funds provider.
- Lincoln Indicators has a strong client base with over 3,000 high net worth (HNW) investors.
- Tim Lincoln will join the partner team and hold shares, indicating confidence in the acquisition.
- Hurdle Rate continues to hold their position in Prime Financial due to these strategic developments.
DMX Asset Management
31 Mar 2025
$0.23
Summary
- PFG reported a much improved first half after a weak H124
- EBITDA increased by 102% compared to last year
- Growth driven by strong contributions from acquisitions and lower one-off costs
- FY25 guidance confirms 15-20%+ growth in Revenue and Underlying EBITDA
- PFG is on track to achieve its $50m revenue target in FY25
- Currently trading at approximately 10x PE
- DMX Asset Management continues to hold because of PFG's strong performance and positive outlook
DMX Asset Management
28 Feb 2025
$0.23
Summary
- DMX Asset Management notes a significant recovery in Prime Financial Group Ltd (PFG) following a weak H124.
- PFG reported a remarkable 102% increase in EBITDA year-on-year for the first half.
- The improvement was driven by strong contributions from acquisitions and reduced one-off costs.
- FY25 guidance has been confirmed, indicating 15-20%+ Revenue and Underlying EBITDA growth.
- PFG aims to meet its $50m revenue target in FY25.
- The company is currently trading at approximately 10x PE.
Hurdle Rate
30 Nov 2024
$0.24
Summary
- Hurdle Rate updates on their investment thesis regarding Prime Financial Group Ltd.
- Prime Financial Group reassured the market about the ongoing NBIO deal for a wealth management firm.
- The deal is significant, with $11.4m of revenue expected.
- Payment structure revised to 80% cash / 20% equity, down from the initial 50% each.
- This change indicates less dilution for shareholders.
- Despite an increased debt facility, the move reflects a strong vote of confidence in free cash flow for the first half.
DMX Asset Management
31 July 2024
$0.21
Summary
- DMX Asset Management invested in PFG via a successful placement they sub-underwrote.
- PFG has been a held asset by DMXCP for some time, allowing for an increased holding for DMXCP and initiation of DMXASF.
- PFG is a Melbourne-based financial services company with integrated services in accounting, wealth management, capital markets, SMSF compliance, and advisory services.
- The company is founder-led and features significant insider ownership.
- PFG has a growth strategy based on both organic growth and strategic acquisitions.
- A small capital raise saw strong insider participation, with DMX taking a substantial position across multiple accounts.
- DMX Asset Management secured an underwriting fee, distributed pro-rata to associated accounts allocated stock.
- PFG is experiencing growth and successfully integrating acquisitions in logical adjacencies.
- The investment represents an entry point at a sub-10 X earnings multiple, despite a strong growth profile.
- DMX Asset Management sees potential for substantial returns as PFG continues to grow and may eventually re-rate its market multiple.
Hurdle Rate
31 July 2024
$0.21
Summary
- Hurdle Rate updates investment thesis on Prime Financial Group Ltd.
- Appointment of James Lake as Chief Growth Officer, enhancing growth strategy.
- Full underwriting of the entitlement offer despite share price trading below entitlement price.
- Strategic purchases made in June at high teens instead of participating at 20 cents per share.
- Current trading at approximately 10x run-rate earnings.
- ~50% payout ratio leading to >7% grossed up dividend yield.
- Expectations of high teens to low 20s returns on incremental capital.
- Projected double-digit sustainable growth rate for the group.
- Potential for rerating to 15x earnings, adding an additional 8% p.a. over 5 years.
Hurdle Rate
30 June 2024
$0.20
Summary
- Prime Financial Group has announced an entitlement offer alongside the acquisition of Equity Plan Management (EPM).
- The acquisition values EPM at an earnings multiple of 4.4.
- This valuation makes the entitlement offer more palatable, considering Prime’s already low valuation.
- There are expected to be strong synergies with Prime’s existing client base.
- Hurdle Rate continues to hold its position in Prime Financial Group based on these developments.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Prime Financial Group Ltd (ASX:PFG)?
Fund managers including DMX Asset Management and Hurdle Rate have invested in Prime Financial Group Ltd (ASX:PFG).
Why do fund managers invest in Prime Financial Group Ltd?
Fund managers invest in Prime Financial Group Ltd due to its strong financial performance, including a 102% increase in EBITDA in the first half of the year. The company is expected to achieve significant revenue growth, with guidance of 15-20% for FY25, and is trading at an attractive ~10x PE ratio. Prime's recent acquisition of Lincoln Indicators enhances its market position and expands its client base, contributing positively to future earnings. Despite some concerns about cash conversion, the growth potential and strategic moves make it appealing for investors.
What happened to Prime Financial Group Ltd (ASX:PFG)?
There have been no recent updates from fund managers regarding Prime Financial Group Ltd although fund managers including DMX Asset Management and Hurdle Rate have previously commented.
What is the short interest in Prime Financial Group Ltd (ASX:PFG)?
According to ASIC filings, there is negligible or no short interest in Prime Financial Group Ltd (ASX:PFG).
What does Prime Financial Group Ltd (ASX:PFG) do?
Prime Financial Group Ltd. is a financial services and advisory company, which delivers wealth management services. It operates through the following segments: Wealth, Business, and Corporate. The Wealth segment consists of Wealth Management and Self Managed Super Funds (SMSF). The Wealth Management refers to the strategic financial advice, superannuation, life insurance, investment planning, and funds management for high net worth and wholesale investors, with a diverse investment offering including access to property-backed debt, equity, and alternative investments including private credit and equity. The SMSF focuses on advice, establishment, administration, and compliance services. The Business segment is involved in Prime Accounting and Business Advisory and Capital and Corporate Advisory. The Prime Accounting and Business Advisory focuses on accounting and tax compliance, business growth advisory and strategy, outsourced CFO and accounting services plus grants, and research and development incentives. The Capital and Corporate Advisory represents the equity and debt capital advisory, finance, corporate development, M&A, valuations, consulting and remuneration strategies, and employee share plan. The company was founded by Simon Madder and Peter Madder in 1965 and is headquartered in Southbank, Australia.