Praemium Ltd (PPS)

By Jason Fittler

“I classify this company as a speculative buy.”

PPS is a software provider of investment portfolio technology with strengths in multi-asset administration.

The company’s technology specializes in corporate action processing... CGT optimisation... sophisticated tax and investment reporting.

PPS offers a range of portfolio management services. Accountants, financial advisors, stockbrokers, self-managed superannuation fund administrators and institutions use these services.

PPS operates in Australia, UK and Internationally.

PPS offers V-Wrap, which provides internet-accessed portfolio administration software services. This service underpins the company’s wrap platform service and Separately Managed Account (SMA) technology. This technology supports the Customized Portfolio Service and the Powerwrap SMA Service. These SMAs are retail-managed investment schemes. Users can invest in the stock market and still receive professional investment management advice.

PPS has invested in improving and expanding their product offerings. These include CRM Systems... Accounting software for self managed super funds... Administration software to keep track of your investments... Separately Managed accounts software and is working on a Superannuation platform.

PPS in December signed up the Royal Bank of Scotland as a client and is expanding fast into Australian markets and overseas.

The catch is that this is a small company. It was not until the 2013 year that they produced their first profit. A net profit of $4.3 million.

The company market cap is $58 million they pay no dividend, as all funds are re-invested back into the company.

Like all IT companies, it will depend on the uptake of their product. There are low barriers to entry in this industry and many competitors.

What sets this company apart is their experience in providing investment administration software.

Software around the administration of investments is more complicated then accounting and less available. Building in the accounting software is easier than building in the investment software. They are also able to provide a CRM, which covers off all the needs of an accountant and an investment adviser.

I expect that the business will continue to build, given they have already kicked some major goals in signing up some large names.

This recommendation is only for those investors who have a high-risk profile, as it is speculative.

Recent buying activities show that some of the larger fund managers are starting to take positions in the company.

The price over the last 12-months has been as low as $0.05 and as high as $0.20 and is currently trading around $0.15.

I classify this company as a speculative buy.

For more information about Praemium Ltd (PPS) please contact us on 07 4771 4577.