Macquarie Group Ltd
Overview of 2018 & First Quarter 2019 Performance: Macquarie Group Ltd (ASX: MQG) that has seen a stupendous share price run-up lately, has been under spotlight with the recent changes announced to the board. Shemara Wikramanayake will now be replacing Nicholas Moore as group’s CEO. Nicholas is being said to leave the big legacy behind while the group has indicated that the operations will not be as such affected with the change and the group has maintained its FY19 outlook. For FY18, MQG has delivered 15% growth in the profit driven by the strength of MQG’s global platform, the diversity of its business mix and ongoing ability to adapt to changing market conditions and client needs. The annuity-style businesses’ (Macquarie Asset Management, Corporate and Asset Finance and Banking and Financial Services) combined net profit grew 6% on the prior year. There is 11% rise in capital markets facing businesses (Commodities and Global Markets and Macquarie Capital).
Moreover, during the first quarter FY 2019, Macquarie Asset Management (MAM) had $A534.1 billion in assets under management at the end of June, which is a rise of eight per cent on 31 March 2018, largely due to reaching financial close on the previously announced GLL Real Estate Partners and ValueInvest transactions, infrastructure asset acquisitions, and favourable market and FX movements. However, this was partially offset by infrastructure asset realisations. MIRA’s equity under management of $A102.1 billion increased 18 per cent from $A86.2 billion at 31 March 2018. 1Q19 included the performance fees from several funds including Atlas Arteria (formerly Macquarie Atlas Roads).
During the first quarter 2019, MIRA has raised equity of $A5.6 billion primarily from its Macquarie SuperCore Infrastructure Fund and Macquarie European Infrastructure Fund 5 (MEIF5) co-investment, and invested equity of $A4.8 billion. The company’s Corporate and Asset Finance’s (CAF) Asset and Principal Finance portfolio is of $A34.1 billion at 30 June 2018, which is broadly in line with 31 March 2018. Banking and Financial Services’ (BFS) Australian mortgage portfolio is of $A34.3 billion, up five per cent on 31 March 2018, and funds on platform of $A86.8 billion also rose five per cent on 31 March 2018, and the business banking loan portfolio of $A7.5 billion increased three per cent on 31 March 2018. Macquarie Capital during 1Q 2019 has completed 115 deals to the value of $A160 billion, up on 1Q18 (by value) and up on the prior period (by value and volume). Additionally, FY 19 is expected to be broadly in line with FY18. However, the company’s short-term outlook is subject to the market conditions, the impact of foreign exchange, potential regulatory changes and tax uncertainties and geographic composition of income. Meanwhile, MQG stock has risen 15.44% in three months as on July 26, 2018 and is trading at a P/E of 16.05x. As of now, we give an “Expensive” recommendation on the stock at the current price of $ 124.020, looking at the high run-up in price.
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FY 18 Financial Performance (Source: Company Reports)
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