Pinnacle share price surges 13% on 2022 financial year profit growth

Pinnacle said the second half of the financial year was unquestionably a more difficult environment than the first half.

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Key points

  • Pinnacle share price surges 13% on FY22 results
  • The multi-affiliate investment management firm reported a 14% year-on-year NPAT increase
  • The FY22 total dividend payout increased 22% from FY21

The Pinnacle Investment Management Group Ltd (ASX: PNI) share price is soaring today.

Pinnacle shares closed yesterday trading for $10.07 and are currently trading for $11.41, up 13.31%.

This comes after the multi-affiliate investment management firm released its full-year financial results for the 12 months ending 30 June (FY22) after market close yesterday.

Below, we look at the highlights.

Pinnacle share price leaps as profits grow in FY22

What else happened during the financial year?

As at 30 June 2022 Pinnacle reported its aggregate affiliates' funds under management (FUM) stood at $83.7 billion. That was down 6% from the $89.4 billion reported for 30 June 2021.

Aggregate retail FUM increased 4% year on year to $21.1 billion.

The company said retail net inflows over the financial year continued to be positive, noting that the first half of FY22 was much stronger than the second half. H1 saw a record $2.9 billion of retail net inflows, while H2 inflows came in at $700 million. Pinnacle said this was mostly due to broader industry-wide pressure and market dislocation.

The investment manager closed out FY22 with cash and principal investments of $178.2 million. Its facility from the Commonwealth Bank of Australia was extended to $120.0 million and fully drawn down on 30 June 2022.

The Pinnacle share price could also be getting a boost after the company revealed it has plenty of "dry powder" on hand for potential business investment with $90.0 million of that CBA facility invested into liquid funds managed by affiliates "until required".

What did management say?

Addressing the growth in profits, dividends and EPS that look to be driving the Pinnacle share price higher today, Pinnacle chair Alan Watson said, "Whilst these growth rates are not as high as anticipated earlier in the year, they were unquestionably affected by the market context of current geopolitical tension, war, elevated inflation and sharply rising interest rates".

Pinnacle's managing director, Ian Macoun, added:

Following the record retail inflows in the first half of the 2022 financial year, net inflows for the second half fell below our expectations as we confronted difficult market conditions and industry-wide pressures.

We have continued to invest in our distribution capabilities, particularly retail and offshore, to ensure that we are well positioned to continue to grow and broaden our market share. In contrast to the disappointing headline flow numbers, it is pleasing that our average base fees continue to rise, and that the revenue impact of our net flows over the financial year has been significantly positive.

What's next?

Looking ahead, Watson said, "We plan to continue our strategy of further increasing the diversity of asset classes under management, and the diversity of sources of funds under management, particularly international, and retaining a healthy percentage of funds under management exposed to performance fees, thereby further increasing both the resilience and growth potential of Pinnacle."

Pinnacle share price snapshot

Despite today's surge, the Pinnacle share price remains down 27% in 2022, compared to a year-to-date loss of 9% posted by the All Ordinaries Index (ASX: XAO).

The past month has been much better for Pinnacle shareholders, with the stock price up 53% since 4 July.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has positions in and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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