GENERATION DEVELOPMENT GROUP LIMITED (GDG)
Share Price Analysis and Chart

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28/04/2025

1

Overweight

$5.65

3.86%

Morgan Stanley highlights Generation Development shares declined -15% after the 3Q25 results, which were mixed, the broker states, with investment bonds and Lonsec Managed Account inflows better than expected, but market movements and inflows from Evidentia impacted the latter's funds under management (FUM).

The analyst stresses Evidentia now needs a substantial gain in FUM for 4Q25 to achieve guidance of $18.5bn.

Investment bonds continued the robust momentum into the March quarter with inflows rising 63% on a year earlier, and this could grow if the Labour government is re-elected and passes legislation to double the tax rate on Super account balances over $3m to 30%.

The broker explains the tailwinds are positive for Evidentia and managed accounts, with the problems in this quarter due to timing issues.

Morgan Stanley lowers EPS estimates by -2% to -5% for FY25/FY26, with target price slipping to $5.65 from $6.30.

Overweight rating retained. Industry view: In-Line.

FORECAST
Morgan Stanley forecasts a full year FY25 dividend of 2.00 cents and EPS of 8.00 cents.
Morgan Stanley forecasts a full year FY26 dividend of 3.40 cents and EPS of 12.00 cents.

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06/03/2025

1

Upgrade to Buy from Hold

$5.58

2.57%

Generation Development's half year result exceeded expectations, with strong revenue and (earnings) EBITDA growth in the Lonsec division, Petra Capital notes.

Revenue rose 23% and underlying net profit after tax advanced 50% to $12.4m. Genlife’s revenue margin improved, with bonds written trending significantly higher on an annualised basis.

Active independent financial advisers transacting with Genlife increased 16% year-on-year, and new investment bonds grew 42%.

Lonsec’s eanrings margin expanded to 42% from 38%, driven by higher LIS margins and stronger research division performance, the broker explains.

Petra Capital expects a higher dividend payout ratio from FY26, supported by the retirement of Lonsec debt and the achievement of earnout targets.

Target price rises $5.58 from $5.18, with a rating upgraded to Buy from Hold.

FORECAST
Petra Capital forecasts a full year FY25 dividend of 2.00 cents and EPS of 8.80 cents.
Petra Capital forecasts a full year FY26 dividend of 3.70 cents and EPS of 12.50 cents.