WTL - WT Financial Group

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Spring FG Limited is a diversified financial services company with products and services encompassing financial planning and investment advice; wealth creation and wealth management solutions; insurance and superannuation; finance; and tax & accounting. Its advice and product offerings are broad and include a specialisation in the high-growth markets of self-managed superannuation funds (SMSFs); and direct and SMSF residential real estate investment.

http://www.springfg.com

 

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On November 15th, 2019, Spring FG Limited (SFL) changed its name and ASX code to WT Financial Group Limited (WTL).

 

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Background
Over the past two-and-a-half years WT Financial Group has undergone a transformational restructure to reduce its focus and reliance on business-to-consumer (B2C) and nonrecurring revenue, to emerge as a primarily business-to-business (B2B) focused enterprise targeting predominately recurring revenue lines.

The successful implementation of the strategy has seen the Company return to operating profit, as set out in its indicative results for FY2020 which were announced to the market yesterday. Central to its strategy has been the acquisition of the Group’s Wealth Today Pty Ltd subsidiary which provides a comprehensive range of “dealer group” services to financial advisers.

The Group’s acquisition of Wealth Today is enabling it to capitalise on industry disruption created by the unravelling of institutional advice models which continues to provide a substantial expansion opportunity. At the same time the institutional advice model has been disintegrating, the many smaller, sub-scale dealer groups with less than 50-100 advisers, have faced ever-increasing compliance requirements and significant increases in demands from advisers for comprehensive internal education and training. This potentially marginalises dozens of existing smaller dealer groups, presenting further opportunity for growth by Wealth Today as operators choose to exit the industry by way of closure or sale.

- they all say this.

In furtherance of this strategy the Company has sold its remaining 50% stake in B2C-focussed digital publisher Sharecafé Pty Ltd (formerly Spring FG Digital Pty Ltd) to it JV partner Informed Investor Pty Ltd for $225,000. The sale price is equal to the Company’s carrying value of the investment. The Company will continue to provide certain support services to Sharecafé on a commercial arms-length basis and will further retain advertising rights on the Sharecafé website for a term of at least 18-months .

- Sharecafé is another low key player, that provides fairly good copy and has an eponymous community chatroom that is withering .

 

[Dona Ferentes]

In another recent action, WTL will acquire all of the issued capital of national financial advisory dealer group, Sentry Group Pty Limited, for an initial purchase price of $7 million; 50% in cash and 50% in the form of WTL shares.

The cash consideration payable on completion of the acquisition is being funded through the placement of new Shares to investors identified by the Company at an issue price of $0.075 per Share, representing a 25% premium to the closing price of WTL on 9 June 2021. The Company is raising a further $1.5M in cash to fund acquisition and integration costs, bringing total cash to be raised under the Placement to $5M. The Company has received firm bids for 25% greater than the available Placement total. It has closed the bookbuild to further bids and is yet to finalise the allocation.

2x book ??

 

[Dona Ferentes]

WTL is set to emerge as a primarily B2B-focused enterprise targeting recurring revenue lines. The successful implementation of the strategy and complementary acquisitions should now see the company return to profitable growth in FY22.

One set of forecasts has the business trading on a FY22 PE of 8.4x and EV/EBITDA of 5.1x. This is a large discount to peers, which on average are on 18x PE and EV/EBITDA of 7.0x. Successful execution of management’s strategy, coupled with potential acquisitions should result in a re-rating towards peers.

(Peers being Centrepoint Alliance, Easton Investments, Sequioa Financial and CountPlus)