Magellan Global Trust

Fund Outperformed Index in October 2019: Magellan Global Trust (ASX: MGG) is a listed investment trust which invests in the securities of companies listed on stock exchanges around the world. In October 2019, the fund grew at 0.8% which is 0.4% higher than the index. In the last three and six months, the fund has witnessed growth of 0.3% and 5.4%, respectively.  As at 15 November 2019, MGV had Net Assets Value (NAV) per unit of $1.9047.


Performance Chart (Source: Company Reports)

Strong FY19 Financial Performance:  For the year ended 30 June 2019, the company reported revenue of $336.60 million, up 71.9% on the previous year. Net operating profit for the period amounted to $304.21 million, up 72.2% on FY18, taking the basic and diluted earnings per share to 27.45 cents. During the year, MGG’s total unitholders' equity increased by 31.7% to 2,225.115 million. As at 30 June 2019, the Fund consisted of investments in 22 companies.
Targets higher distribution for H1FY20:In FY19, MGG paid interim and final distribution per unit of 3 cents each. For the interim period of FY20 (six months ending 31 December 2019), MGG has set a Target Cash Distribution per unit of 3.3 cents unit, up 0.3 cents on pcp and in-line with the distribution policy for the Trust.  

De-escalating Trade-war tensions: Global investment funds are sensitive to Trade disputes and geopolitical frictions. The results of MGG’s operations are affected by a number of factors, including the performance of investment markets in which the Fund invests. Last year, the looming tensions rising from trade war between US-China and the uncertainty regarding Brexit, negatively impacted the performances of many global investment funds causing funds to grow at slower rate. Now that the US and China are in talks of settlement, we can expect the trade tensions to fade a little.

Stock Recommendation: In the past one year, the stock of the company generated returns of 13.64%. The stock is currently trading at $1.860, near to its 52-week high of $1.900. Considering the in October’19 fund performance, decent growth in FY19, higher distribution target and fading trade war concerns, we recommend a “Hold” rating on the stock at the current market price of $1.860, down by 0.8% on 19 November 2019.
 

MFF Capital Investments Limited

Growth in NTA per share: MFF Capital Investments Limited (ASX: MFF) invests in a portfolio of exchange listed international and Australian companies with attractive business characteristics. For the month of October 2019, MFF reported monthly Net Tangible Assets (NTA) per share amounting to $3.505 pre-tax, higher than the NTA per share of $3.225 as at 30 June 2019. As at 15 November 2019, NTA per share further increased to $3.646 (pre-tax) and $2.964 post-tax.
Targets higher Dividend:  For the six months ended 30 June 2019, the company paid a fully franked dividend of 2 cents per share. At the recently held 2019 AGM, the Board confirmed its intention to increase the rate of the six-monthly dividend, over time, to 2.5 cents per share. MFF Board has been considering a range of matters in setting its dividend policy. These include MFF’s continuing strong investment returns on its retained capital and recent increases in its paid taxes.
Strong Financial Position and Portfolio Liquidity: In FY19, MFF recorded a pre-tax profit of $312.2 million, higher than its expectations, based upon its starting capital of $1,238.2 million. MFF’s portfolio remains focused upon advantaged businesses with the portfolio supported by its excellent financial position and portfolio liquidity. As at 30 June 2019, MFF had $1,443.6 million of total equity, comprising $838.1 million of retained profits and $605.5 million of Contributed Equity. As at 30 June 2019, MFF’s imputation credits were around $46 million which enables dividends to be fully franked. At the AGM, Chris Mackay, Managing Director and Portfolio Manager, highlighted that MFF is reluctant to give up liquidity without compensating factors.  MFF has a strong portfolio with significant holdings in company’s like Visa, Mastercard and Home Depot. MFF’s investments as at 27 September 2019 are summarized in the below table:

MFF Portfolio (Source: Company Reports)

What to Expect: As MFF invests in international exchanges’ listed securities as well, it is sensitive to international equity market risks. In the last few months, the trade-war between US and China impacted many investment firms. The recent commencement of settlement talks between US and China, could favorably influence the sentiments of the market players. 

Recommendation: During the past one year, the company’s stock generated returns of 31.54%, demonstrating remarkable market confidence. In the last six-months, the stock has generated returns of 17.12%. The stock is currently trading near to its 52-week high of $3.470. Considering the NTA per share growth, decent financial position and portfolio liquidity and improving international market sentiments, we recommend a “Hold” rating on the stock at the current market price of $3.450, up 0.877% as on 20 November 2019.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.