-Not the first regulator to raise concerns about PFS
-Remedies likely to include extra oversight costs
-Confidence building now required
The cat is again among the pigeons in the financial services market, with the
This has severely impacted its share price, which has slumped around -45%. The upshot is that uncertainty is likely to weigh over the short term, Macquarie points out.
The CBI is investigating misconduct under anti-money laundering and counter-terrorism financing rules.
EML did not disclose the potential financial/legal impact but did indicate directives could restrict its European licence/programs. The broker believes the programs occurred in operations that were regulated under the
This is not the first regulator to raise concerns about PFS, Wilsons notes, as both the French and
Macquarie, too, expects the company will be able to continue operating, although there will be an increase to the cost base. Based on the 27% share of revenue derived from programs operating under Irish authorisation, the broker believes around
Macquarie emphasises it anticipates no suspension. Since 2019, the broker points out, the CBI has reached settlements on 14 enforcement actions and none have resulted in suspension of licences.
If the worst-case scenario were to eventuate,
Remediation
Potential remediation actions Wilsons considers include increasing expenditure on systems and risk and a suspension of the licence until adequate remedies are deployed, as well as increased regulatory oversight.
The broker makes no changes to forecasts but reduces its valuation and lowers its target to
Macquarie maintains an Outperform rating and reduces its target to
A period of confidence building and educating investors on the operating risks inherent in the business is likely to ensue. Further to the news, Macquarie incorporates reduced profit of -
Canaccord believes investors are now factoring in a loss of the European licence, coupled with a slowing of sales momentum in the broader business and takes a conservative stance, awaiting further information regarding the issue before adjusting forecasts.
The broker believes PFS and the broader
FNArena is proud about its track record and past achievements: Ten Years On
All material published by
© 2021 Acquisdata Pty Ltd., source