Pacific Current Group Limited

Company Overview: Pacific Current Group Limited (ASX: PAC), headquartered in Australia, is into asset management, private advising, placement, and investment-related businesses. Additionally, the company offers distribution and management services to particular investee companies on an agreed basis. The portfolio of the company includes several strategies that are diversified by investment approach, area, revenue model, and client type.

PAC Details – ‘Speculative Buy’ Recommendation at closing market price of $6.65 per share as on 23^rd June 2022

Snapshot of PAC 1HFY22 Results:

Historical Management Fees & Performance Trend:

The company provides more emphasis on the management fees related to revenue over performance fees, this eventually helps the company to stabilise its earnings and reduce volatility leading to good quality earnings. The underlying NPBT shows growth over the years, and with the recent recognition of GQG contribution, the profitability is expected to grow in the coming six months and for FY23.

Key Metrics: In 1HFY22, the company's current ratio stood at 1.55x compared to the industry median figure of 1.44x.

Top 10 Shareholders: The top 10 shareholders together form around 57.58% of the total shareholdings, while the top 4 constitute the maximum holding. Perpetual Investment Management Limited and Regal Partners Limited are holding a maximum stake in the company at 14.52% and 10.04%, respectively, as also highlighted in the chart below: 

Risk Analysis:  

Outlook: PAC expects better earnings growth in FY22 and FY23, owing to expected GQG contribution, decent impact from PAC investment in Banner Oak, steady fundraising progress, and an increase in management fee revenue. The company is set to report its FY22 results on 26 August 2022.

Valuation Methodology: P/CF Multiple Based Relative Valuation (Illustrative) 

Stock Recommendation:

PAC Daily Technical Chart, Data Source: REFINITIV 

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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