Magellan Financial Group Limited

Net inflows of $218 million as at June 2018: Magellan Financial Group Limited (ASX: MFG), having a market capitalisation of $ 4.33bn and dividend yield of 3.73%, experienced net inflows of $218 Mn in June month, which included net retail inflows of $4 Mn and net institutional inflows of $214 Mn. While in May month, the Group experienced net outflows of $47 Mn, which included net retail outflows of $57 Mn and net institutional inflows of $10 Mn as of 31 May 2018. There was a growth of 3.2 per cent in total funds under Management from May 2018 to June 2018. This growth was mainly supported by decent growth of retail and institutional fund management business. Based on this, the group will pay distributions (net of reinvestment) of approximately $755 million in July 2018 which will reflect in the FUM figures in subsequent month’s announcement. Meanwhile, MFG stock has risen 7.25 per cent in the past three months as on July 24, 2018 and still reflects a room for growth given its steady performance and long-term potential. Hence, we maintain our “Buy” recommendation on the stock at the current price of $ 24.830.
 

Spark Infrastructure Group

AER final decision pending by year end: Spark Infrastructure Group (ASX: SKI) has a market capitalisation of $ 3.8bn with 6.75% as dividend yield. The group has 49% interest in electricity distribution businesses, CitiPower and Powercor in Victoria, a 49% interest in the electricity distribution business, SA Power Networks, South Australia; and a 15.01% interest in TransGrid, New South Wales. Given the exposure to the energy landscape, the group seems to witness some growth opportunities going forward. On the other hand, Spark is eyeing the final decision from the Australian Energy Regulator (AER) on its Draft Rate of Return Guideline, pending in December 2018. However, Spark is having certainty of cash flows from regulated assets in the short term, and the five-year regulatory determinations for SA Power Networks and Victoria Power Networks are also in place until 30 June 2020 and 31 December 2020 respectively. TransGrid’s regulatory determination for the period from 1 July 2018 to 30 June 2023 was released on 18 May 2018. Going forward, AER decision will be essential to understand allowed rate of return to estimate the cost of fund required to attract an investment in network. Meanwhile, we maintain a “Buy” at the current price of $ 2.290.

 
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