SEQ earnings upgrade

One of our portfolio holdings, Sequoia (ASX: SEQ), appreciated by +15% this week. A profit upgrade announced on Wednesday triggered the share price movement. In this post, we share our opinion towards this company and why we keep topping up our position on the way up.


Company overview

SEQ is an integrated financial services company providing a wide range of products and services to self-directed retail and wholesale clients.


Their products and services include:

● Wealth management, e.g. InterPrac Financial Planning

● Professional services division, e.g. SMSF administration

● Equity markets division, e.g. Morrison Securities

● Direct investment division, e.g. Financial News Network





The management team has a good track record in growing the company. In the three years between FY18 and FY20, SEQ grew its revenue and profit by 11% and 266%, respectively.


The management team delivered what they promised. They started a business improvement program to strengthen the business and expand the operating margin in FY18. The massive profit growth in the past three years has proven management quality in running the business. We continue to top up our position as our confidence in the management rises with their performance.


Profit guidance upgrade

On 22 April 2021, SEQ announced a profit update for FY21. Here is the updated profit guidance:

● Revenue: between $110m and $120m, up from $110m

● EBITDA: between $8.5m and $9m, up from $7m


Conclusion

At Glennon Capital, good management is one of our crucial selection criteria. We believe great investment returns come from companies managed by outstanding and experienced teams.


Till next week, happy investing.


Michael and Kenny

Any information has been prepared for the purpose of providing general information only, without taking account of any particular investor's objectives., financial situation or needs, It is not an offer or invitation for subscription or purchase, or a recommendation of any financial product and it is not to be relied on by investors in making an investment decision. Past performance is not a reliable indicator of future performance. To the extent any general financial product advice is provided in this document, it is provided by Glennon Capital Pty Ltd ACN 137 219 866, AFSL No. 338 567. An investor, before acting on anything construed as advice, should consider the appropriateness of such construction and advice having regard to their objectives, financial situation or needs.