Why the Insignia (ASX:IFL) share price is gaining today while the ASX 200 tanks

The company announced its results for 1H FY22. Here are the details.

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Key points

  • Insignia share price lifts on strong half-year results
  • Underlying profits and gross margin increased
  • Its integration with MLC is running ahead of schedule

The Insignia Financial Ltd (ASX: IFL) share price is bucking the broader market sell-off today, currently up 0.78%.

Insignia shares closed yesterday trading at $3.86 and are now swapping hands for $3.89 apiece. However, earlier in the day they were up as high as $3.95.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 2.39% at the time of writing.

Below we look at the highlights from the ASX financial services company's results for the half-year ending 31 December (1H FY22).

This is the first time the company, formerly IOOF Holdings, is reporting under its new name.

Insignia share price gains on improving outlook

  • Underlying net profit after tax (UNPAT) of $117.9 million, up 79% from the previous corresponding period
  • Net profit after tax (NPAT) was $36.2 million, down 33% from 1H FY22
  • Gross margin increased 122% year-on-year to $778 million (includes a 6-month contribution from MLC)
  • Interim dividend of 11.8 cents per share, fully franked, up 3% from 1H FY21
  • Dividend reinvestment plan introduced with 1.5% discount

What else happened during the half?

Funds under management (FUMA) were $325.8 billion during 1H FY22, up $7.1 billion. Insignia said that growth was driven by strong market returns.

The Insignia share price could be getting a lift after the company noted an "encouraging improvement in net flows during the second quarter". There was a $2.3 billion quarter-on-quarter improvement in net flows in the Q2 of FY22, with total net outflows falling to $20 million.

With its integration with MLC running ahead of schedule, the company said it achieved cumulative annualised savings of $122 million, with annualised savings of $66 million achieved in 1H FY22.

The decline in NPAT was due to a $35 million increase in integration and funding costs.

The interim dividend is payable on 1 April. Insignia has introduced a dividend reinvestment plan with a 1.5% discount.

What did management say?

Commenting on the results, Insignia's CEO, Renato Mota said:

The financial results for our first full six-months of MLC ownership are strong, with significant improvement in UNPAT and revenues, and we have executed on our strategic priorities whilst continuing to simplify our business and deliver improved client outcomes.

Our focus over the half has been the integration of MLC, the simplification of platforms, including completion of the migration on to our proprietary Evolve technology, and our reshaping of the Advice business to ensure its long-term sustainability and profitability.

As part of this strategy, targeted product enhancement and repricing is now providing clients a more attractive product suite, while higher adviser education and governance standards and use of new technologies, provides an improved advice offer to our clients.

What's next?

Looking ahead, Insignia reported it will remain focused on simplifying its operations and enhancing its product and service offerings.

"We are on track to deliver synergies of $100 to $120 million run-rate range by the end of June, and well on track to deliver the total cumulative synergy run-rate of $218 million of synergies by end of December 2022," Mota said.

Insignia share price snapshot

The Insignia share price is up by almost 7% so far in 2022. It is also up by 13% over the past month and 14% over the past year.

For comparison, the ASX 200 has posted a year-to-date loss of more than 5% and is up almost 4% over the past 12 months.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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