Magellan Financial Group Limited
MFG Details
Business Updates: Magellan Financial Group Limited (ASX: MFG) operates in the investment management and fund operations sector, with business divided into four segments fund management, principal investments, corporate, and Magellan capital partners.
- As announced on 3 June 2022, Mariana Kolaroski has stepped down from the position of Company Secretary, which became effective from the close of business on 3 June 2022.
- As per the recent quarterly rebalance of S&P/ASX Indices, MFG will be removed from S&P/ASX 100 Index. This would be effective prior to the opening of trading session on 20 June 2022.
Insights of FUM: The following picture gives an idea of Funds Under Management Summary:
Funds Under Management, (Source: Analysis by Kalkine Group)
Key Risks: MFG is required to maintain a significant level of liquidity to manage operational risk, it also faces the credit risk if the money owed to the group will not be received. The company is exposed to market risk as the value of financial assets and liability will fluctuate due to factors like interest rate, market price, and exchange rates.
Outlook: Fund management is the core business segment of MFG that drive its revenue and profitability. The company has initiated new strategies to attract investments like sustainable strategies, lucrative returns and the company maintains a strong balance sheet to withstand the worst market conditions.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock is trading below its 52-week low-high average of $13.220 - $56.180, respectively. The stock has been corrected by ~9.87% in the past month. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target of low double-digit upside (in % terms). The company can trade at a slight discount to its peers considering the fall in funds under management, investment risk, the decline in liquidity, and market disruption. For the purpose of valuation, peers such as Perpetual Ltd (ASX: PPT), Pendal Group Ltd (ASX: PDL), Netwealth Group Ltd (ASX: NWL), and others have been considered. Considering the expected growth in FUM, new investment products launch, capital management initiative, current trading levels, expected upside in valuation, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on this stock at the closing market price of $14.930, up by ~0.067% as of 3rd June 2022.
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
MFG Daily Technical Chart, Data Source: REFINITIV
Wisr LIMITED
WZR Details
Insights of Q3FY22: Wisr Limited (ASX: WZR) operates in the consumer lending sector and provides a collection of financial products and services. The company has recently launched the Wisr Financial Wellness Platform which provides a cost-effective direct channel. The below picture provides an overview of the company’s performance in Q3FY22:
Q3FY22 Summary (Source: Analysis by Kalkine Group)
Key Risks: The company is working in such an industry that it is exposed to a few risks like credit risk, liquidity risk, market price risk, and risk of inability to recover the loan.
Outlook: WZR is on a clear path to reach one million profile data over its Financial Wellness Platform which will help in providing targeted and personalized lending offers. The Wellness Platform will drive future growth as it reduced the cost by 68% compared to direct channels. WZR is targeting to achieve a loan book of $3 billion from its current loan book of $1 billion.
Valuation Methodology: P/BV Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The stock is currently trading near its 52-week low of $0.087, offering a decent opportunity for accumulation. The stock has witnessed a slight upside of 1.01% in the past month. The stock has been valued using a P/BV multiple-based illustrative relative valuation and arrived at a target of low double-digit upside (in % terms). The company can trade at a slight premium to its peers, considering the growth in Wisr Financial Wellness Platform, loan growth, better Q3 results, etc. For the purpose of valuation, peers such as Plenti Group Ltd (ASX: PLT), Money3 Corp Ltd (ASX: MNY), Humm Group Ltd (ASX: HUM), and others have been considered. Considering the better quarter performance, expected growth in market share, users’ growth in Financial Wellness Platform, current trading levels, expected upside in valuation, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on this stock at the closing market price of $0.098, down by ~2.00% as of 3rd June 2022.
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
WZR Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV
Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock price
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