Sequoia Financial Group (ASX:SEQ) 1H21 results & outlook


by Rachael Jones

Sequoia Financial Group Limited (ASX:SEQ) Managing Director Garry Crole talks about the company's strong 1H21 results on the back of increased trading activity, wealth management and continued growth in advisors.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me from Sequoia Financial Group (ASX:SEQ) is Managing Director Garry Crole. Garry, welcome back to FNN.

Garry Crole: Good to see you again, Rachael.

Rachael Jones: Now, Sequoia operates an integrated financial services business. Can you remind us about the size and scale of the business today?

Garry Crole: Yeah, sure. We just reported some half year results and we're tracking at around $100 million annual revenue and we're tracking towards around about $6 to $7 million of operating profit at present.

Rachael Jones: Thanks, Garry. Now, let's look a little bit more closely at the results. What were the highlights?

Garry Crole: Several highlights, particularly in our wealth group and our equity markets arm. So, our wealth group grew by 50 per cent in revenue for the half year period to around $30 million, and our Morrison Securities Business, in particular, and the equity markets business doubled. One of the sort of highlights from a statistical point of view is, 12 months ago, we had $400 million of stock on HIN. Today, we have 2.8 billion stock on HIN. So, a seven times increase in the CHESS sponsorship. So, really, really grew growth, and a tribute to our great staff.

Rachael Jones: They're absolutely fabulous figures there, Garry. Now, what do you believe drove these results?

Garry Crole: We certainly made some acquisitions across the 12 months, but primarily what's happening is we built the Morrison business out to create an opportunity to get growth and hoped it would come, and clearly it has. Our team is definitely first class. The number of AFSLs that are choosing us opposed to the competition has grown, and really, really driving that growth. And the same thing's happening on the wealth side. We had 33 per cent growth in advisor numbers over the 12 months, and the revenues flowed from there. So, a really exciting and real high growth period.

Rachael Jones: Excellent. Now, let's talk about the operating environment. What helped over the last six months and what are the challenges?

Garry Crole: So, there's certainly a few things that are occurring. Obviously, March 2020 when the markets collapsed created some tension in consumers, and that drove a lot of demand to their financial planner. The second thing that occurred was that very high self-directed traders increased, the Robinhood traders of the world, and a lot of those advisors had a go by themselves, but then started to look to engage with an advisor to get advice because they become attracted to direct equity as opposed to traditionally investing in managed funds and so on. So, it's probably a little bit environmental, but certainly a lot to do with more advisors and more clients.

Rachael Jones: And what is the outlook?

Garry Crole: The outlook is continued growth. So, we're certainly on the acquisition trail, and we certainly expect high double-digit growth rates to continue. We would like to have 10 per cent of the available market in the financial planning space. So, that's a 300 per cent growth target, and we're talking about a five-year plan to be a $400 million revenue business with around $30 million of operating profits. So, a very long way away from where we are currently, but the trajectory is right, and we're heading in the right direction, and the biggest asset we have is our staff. We've got great staff in all four divisions, and it's a very exciting period for the company.

Rachael Jones: And to the last question, Garry. Is there anything else you'd like to add?

Garry Crole: Probably touched on the staff. I'd like to thank the staff and I'd like to thank the shareholders for their patience. Our share price 12 months ago was 20 cents and was lagging. Today, it's close to 50 cents and those people who have stuck behind us from a staffing point of view, the clients, and the shareholders, I'd like to thank them, and I think we're on a good ride from here.

Rachael Jones: Garry Crole, thanks for the update and congratulations on those fantastic results.

Garry Crole: Thank you very much.


Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.