Is HUB fully priced?, page-9

A target of $8-10B and >10M NPAT by 2020 is definitely not out of the question. Hub do have a very good product.

The network effect can have both positives and negatives. The dealer group game comes with quite a bit of risk, so whilst the returns can be OK, it only takes one rogue to take all the dealer groups profit and then some. It's a mugs game IMO and independence if more important for hub as opposed to trying to buy distribution which is what the banks do.

Competition is an obvious risk, not just in the form of current competitors. Think Robo-advice; international competitors coming in and happy to take a 10-15bp margin (common in UK and US) as opposed to the 25+bp margin currently enjoyed by Australian platforms; better SAS adviser back office systems; Mfund replacement of Offmarket Managed Funds; industry funds moving towards whole of market proposition...just to name a few.

To clarify, I don't doubt that Hub will continue to grow and may well hit their projected targets. I question OT trading at a PE of c. 20 times 2020 NPAT or c. 200 times FY16.

People need to understand that their current %growth is off a very low base, whilst their growth in FUM will likely continue their %growth will come down significantly as their FUM increases. NPAT as a % of profit will also likely reduce IMO.