MAGELLAN FINANCIAL GROUP LIMITED

Magellan invests in global equities and global infrastructure sector that are listed. Its primary focus is to protect the capital of the clients and to generate attractive returns for them. The company creates and safeguards the wealth for the investors. They invest in high-quality global stocks. Several factors including the rise of the emerging consumer, the coming of the cashless society, the recovery in US housing, the dominance of business software giants and the arrival of digital consumer platforms have been an impetus to the growth of the stocks in the recent past.

Needle on Key Metrics: While total Funds under management slipped slightly in November 2018 ($ 72.1 bn) against October ($ 72.9 bn), MFG has been able to manage the scenario of FUMs over the last couple of years. The company experienced revenue growth of about 34% approximately in FY 2018. The total funds under management have seen a consistent CAGR growth of 24.21% over the last five years. The increase in funds under management was driven by investment performance of approximately $8.5 billion less cash distributions of nearly $0.3 billion, net inflows of $4.1 billion and the acquisition of Airlie in March 2018. The EPS stood at 122 cents in FY 2018 and has seen a Y-O-Y growth of 7%. The cost to income ratio was almost in line since the last five years however it lately decreased by 8%. The total assets of the company grew by 37 % Y-O-Y and stood at $674.94 million. The asset turnover ratio increased slightly Y-O-Y basis and though the current ratio decreased Y-O-Y, however still the company manages to keep a ratio of almost above 5 in FY 2018. The net cash flows from operations grew by 3% Y-O-Y in FY 2018, and the cash and cash equivalents have seen a growth of almost 16% in the current year.

The fundamentals look healthy for the company. It is following robust growth over the past few years. With the company’s business strategy of investing in medium to long-term equities with the aim of safeguarding the wealth of investors the business can see maintaining its past financial growth trends. The increase in AUM is clear evidence of the company’s growth over the past few years. Although there can be some volatility in the stock price as per the recent short-term market trends, however, MFG is worth an investment over medium to long-term, and we recommend a ‘buy’ at the current price of $ 25.41, though down 5% on December 10, 2018.
 

MFF CAPITAL INVESTMENTS LIMITED

MFF is into the business of investing in equities. MFF aims at maximising compound risk adjusted after-tax returns for shareholders. The company does this by identifying and investing in a minimum of 20 stock exchange listed international and Australian companies. MFF generally invests in stocks with  attractive business features, with an aim of value investing. It also focuses on reducing the risk of permanent capital loss for shareholders. Its weekly net tangible asset per share has been around $2.683 pre-tax and $2.235 post tax, as at December 07, 2018. The pre-tax value has been below the June 2018 figure.

Decent Key Metrics: The company experienced a sharp revenue growth of 47% approximately in FY 2018 and it stood at $350.52 million. The EPS stood at 44.91 cents in FY 2018 and had seen a Y-O-Y growth of 42%. The net profit of the company showed an increase of almost 51% Y-O-Y from FY 2017. Currently, this stood at $239.91 million. The total assets of the company grew by 23 % Y-O-Y and stood at $1497.53 million. The asset turnover ratio increased marginally on Y-O-Y basis. The current ratio increased significantly Y-O-Y with payables and short-term borrowings decreasing to a great extent in FY 2018 in contrast to the previous year. The net cash flow from operations however stood at $19.98 million in FY 2018 in comparison to $30.21 million in the previous year, owing to a higher purchase of investments in FY 2018. The cash and cash equivalents have seen a negative growth in FY 2018 as compared to FY 2017, however this is mostly attributable to repayment of borrowings.

MFF has a positive outlook going forward. With lesser amounts of debt and increasing revenue trends, the company certainly looks impressive. The current ratio significantly increased to maintain a healthy liquidity scenario for the company. The company may very well continue with its past increasing growth trends going forward.The company fundamentals seem quite robust and support a ‘buy’ recommendation at the current price of $ 2.55, down 3.4% on December 10, 2018.
 

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