Praemium (ASX:PPS): A Hidden Gem in Wealth Tech with Catalyst-Driven Upside

The wealth technology sector is crowded, but few companies offer the combination of undervalued metrics, accelerating growth, and near-term catalysts found in Praemium (ASX:PPS). Trading at just 10x forward EV/EBITDA—a fraction of peers like Netwealth (NWL) and Hub24 (HUB), which trade at 15–20x multiples—PPS is a textbook case of market mispricing. This article explores why PPS’s valuation gap is unsustainable, its growth tailwinds, and why now is the time to act.

Valuation Mispricing: A 10x Deal in a 20x World

PPS is fundamentally undervalued relative to its peers despite superior growth and margin expansion potential. Here’s the math:
- EV/EBITDA Multiple: PPS trades at 10x for FY25, while NWL and HUB command 15–20x, despite having 3x the market share of PPS. This discrepancy defies logic given PPS’s >20% annual revenue growth and margin targets of 35–40% (vs. NWL’s 51% EBITDA margin, which is unsustainable at scale).
- EPS Growth: PPS’s earnings are growing at a 60%+ 3-year CAGR, driven by pricing power and cost discipline. NWL and HUB, by contrast, face margin compression as they expand.

The market has overlooked PPS’s niche dominance in high-net-worth (HNW) and private asset services, where it holds 40%+ share of Australia’s $400B private wealth segment. This positioning is a moat peers lack.

Near-Term Catalysts: Synergies, Pricing, and Inflows

PPS is primed for an earnings inflection in 2025–2026:

1. OneVue Platform Synergies: The $4m EBITDA accretion by FY26 from its acquisition of OneVue is a game-changer. This platform integrates superannuation and wealth management, addressing a $100B+ market. Early traction is strong, with net flows returning after adviser migrations stabilized.

2. Scope/Scope+ Pricing Hikes: Effective January 2025, PPS raised fees on its SMA platform, which accounts for 60% of revenue. These hikes will fully drop to the bottom line by FY26, boosting margins.

3. Net Inflows Rebound: After temporary outflows tied to Escala migrations, PPS’s $52.7B FUM (funds under management) is now growing. The Spectrum platform, targeting broader wealth pools, has seen “optimistic” early results, with FUM set to hit $60B+ by end-2025.

Long-Term Tailwinds: Niche Dominance and Migration Trends

PPS’s growth isn’t a flash in the pan:
- HNW/UHNW Market Share: PPS’s focus on private assets (e.g., art, real estate) and high-touch service caters to a segment growing at 8% annually, outpacing mainstream wealth management.
- Legacy Platform Migration: Australia’s $3.5T wealth market is 1–3% annually migrating from outdated legacy systems to modern platforms like PPS’s. This trend is structural and underpenetrated.
- Insider Alignment: Directors own $19m in PPS shares, signaling confidence. CEO Matt Wilson’s 1.2% stake aligns his interests with shareholders.

Risk/Reward: A Rejected Bid Highlights Upside

The $1.50/share bid from NWL in 2021—rejected as too low—provides a floor. With PPS trading at $0.95, this represents 58% upside. Additional catalysts:
- Dividend Restart: A 1cps dividend in 1H2025 signals capital allocation discipline.
- Balance Sheet Strength: No debt and $12m in net cash give PPS flexibility for M&A or buybacks.

Conclusion: A Rare Asymmetric Opportunity

PPS is a compelling buy at 10x EV/EBITDA, with catalysts poised to close its valuation gap with peers. Its niche dominance, margin expansion, and insider alignment create a high-reward, low-risk profile. With a $1.50+ fair value implied by NWL’s bid and organic growth, the asymmetry is clear.

Act now before the market catches on.

Disclosure: This analysis is based on publicly available data and the author’s interpretation. Always conduct your own research before investing.