Perpetual’s FVE Increases on Future Earnings from New Acquisitions, Advisors and Cost out Program

We’ve increased narrow-moat Perpetual’s fair value estimate to AUD 43.50 per share from AUD 40.00 due to an upgrade to future earnings from fiscal 2021 following two new acquisitions, the onboarding of 16 new financial advisors, and cost out program. We now forecast the group’s underlying net profit after tax, or UNPAT, to increase by about 8% per year over the next five years, from previous 5%. At our fair value estimate, the company has a fiscal 2020 P/E of 19.1 and dividend yield of 5.0%. But given the execution risks in its acquisition strategy, shares screen as moderately expensive.