AMP - turnaround underway
AMP - we believe the turnaround strategy at AMP continues to deliver tangible progress (Livewire).
AMP has been written off by many investors since the Banking Royal Commission in 2019, but I believe the company is finally delivering a credible turnaround.
The findings of the Royal Commission caused significant reputational damage. The business lost clients, suffered outflows, and was forced to pay remediation. Investors deserted the stock.
But since 2021, under a new leadership team, AMP has been executing a focused turnaround strategy. The company has sold underperforming assets, returned capital to shareholders, and refocused on its core operations.
The key drivers of revenue growth and profitability have turned and are set to improve further over the next 12–24 months. The most recent result showed accelerating inflow growth within the platform business. Costs are coming down as management executes a cost-out program, and underlying profitability is increasing.
The jewel in AMP’s crown is its North platform, which represents around 44% of group NPAT. I believe this division is undervalued by the market. It delivered +7.4% underlying growth in 1H FY25 versus 1H FY24, with a particularly strong June quarter underpinning momentum into the second half.
With its differentiated retirement products, I expect the platform to win new advisers, take market share, and drive better-than-expected inflows over the next 12–18 months. As a result, the share price should re-rate.
Investors should monitor inflow momentum across the Platform and Superannuation & Investments divisions, as well as the company’s ability to deliver on guidance.
At present, AMP trades on ~14.5x forward P/E, a 28% discount to the ASX 100. That discount won’t persist if the turnaround continues to gain traction.