Macquarie Group Ltd (ASX: MQG)
Higher Yield expected in 2018: Macquarie Group has recently issued 6,917 fully paid ordinary shares in the month of November. As on 30 November 2017, there were 81, 663 unlisted Exchangeable shares issued by Macquarie Capital Acquisition (Canada) Limited, a subsidiary of MQG pursuant to the retention agreements entered with key Orion Financial Inc. employees after Macquarie completed the acquisition of Orion.The group also elevated its interim dividend till 8% that was $2.05 per share on total earnings per share of $3.70. It achieved FY17 net profit of A$2,217 million for the year, which is an increase of 7.5% as compared to prior year; and reported an operating income of $A10,364 million, which is an increase of 2% on prior year. Moreover, the return on equity also increased by 14.7% as compared to prior year and now it is 15.2% The board has approved $1 billion for share buyback depending upon the market conditions; and as the stock prices are high, the bank’s management is confident that the stock still offers good medium-term value. Meanwhile, the group’s core asset management business once again proved to be a dominant performer, with high performance fees which lifted the total fee and commission income by 17%.
Macquarie Group was now found to be selling its 11.5% stake in ASX-listed toll-road company Macquarie Atlas Roads Group and announced a block trade. Macquarie was calling for the bids for 76 million shares starting from $5.80 per share to a maximum of $6.10 per share. This was due to the reason that Macquarie group is set to lose the rights to manage the toll-road company.
Meanwhile, it remains well positioned to deliver superior performance in the medium-term due to its deep expertise in major markets and its ability to adapt its portfolio mix to changing market conditions. MQG’s future results are forecasted to be in line with 2017 financial results. The market expects MQG to offer a yield of about 5% over 2018 if it lifts the 2018 final dividend to about $3 per share. Its acquisition of UK’ Green Investment Bank for £2.3 billion can be a catalyst for growth.
Performance Summary (Source: Company Reports)
Stock Performance: MQG has hit a record high level in the last six months with an increase of 7.86% in price and trades at a very high level. We give an “Expensive” recommendation at the current price of $96.88
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