Magellan Global Trust
MGG Details
Decent Opportunity at Current Juncture: Magellan Global Trust (SX: MGG) is a top 100 ASX-listed company that grows and safeguards the wealth of its clients by investing in the world's best companies and generate good returns for its investors over the mid to long term period. Recently, MGG disclosed its weekly NAV per unit of Magellan Global Trust and recorded the same at $1.6649 as at November 02, 2018, against $1.6551 as on October 26, 2018. Further, MMG investment portfolio delivered a flat return in one month (as of 30 September 2018) as compared to MSCI World Net Total Return Index (AUD) returns of 0.5%, showing degrowth of 0.5% against Index. For six months’ performance, MGG Investment Portfolio delivered decent returns of 14.1% (as at 30 September 2018) against the benchmark of 13.2%. Since inception, MGG Investment Portfolio generated 19.9% returns per annum against the MSCI World Net Total Return Index returns of 18.7% p.a. As at 30 September 2018, the fund size stood at A$1,827.3 Mn, displaying moderate down from August month wherein fund size was A$1,827.4 Mn. Valuation-wise, the group looks attractive MGG looks impressive with the Net margin of 90.2% in FY18. It has PE multiple of 10.08x and P/BV multiple of 1.05x, representing decent opportunity at the current juncture.
Investment Performance (Source: Company Reports)
On the other hand, the objective of the group is to achieve attractive risk-adjusted returns over the medium to long-term, while reducing the risk of permanent capital loss. To accomplish this, the group focuses on rigorous research to identify the high-quality companies, with the assessment of macroeconomic factors and a disciplined risk approach to portfolio constructions. Meanwhile, the stock has generated a YTD return of 3.05% and is looking positive on the chart. Moreover, 14-day RSI has just bounced back from the oversold zone, signaling an interesting opportunity. Further, the stock has a market capitalization of circa $1.78 Bn and a beta of 0.73x as on 180 days (daily basis), representing undervalued stock at the current level. Hence, we give a “Buy” recommendation on the stock at the current market price of $1.695, up 0.3% on November 6, 2018.
EML Payments Limited
EML Details
High volatility while speculation prevails: EML Payments Limited (ASX: EML) provides prepaid payment services in Australia, Europe, and North America. The company issues mobile, virtual, and physical card solutions for pay-outs, gifts, incentives and rewards, and supplier payments. It also offers supplier enablement, payment execution, program management, and other services. The company was formerly known as E- merchants Limited and changed its name to EML Payments Limited in November 2016. EML Payments Limited was founded in 2001 and is based in Brisbane, Australia.
It has a market capitalization of circa $362.52 million as of November 06, 2018. The company is currently managing 1200 card programs across 21 countries. Firm’s Gross debit volume (which indicates the amount of payments processed on the platform) has reached $6.75 Bn, exhibiting a rise of 53% on Y-O-Y basis. EBITDA has seen a 43% rise and has reached $20.38Mn in FY18 on the back of 114% and 86% rise in the GDV in the Australia & UK/Europe region, respectively. Total overheads (including employment related overheads & other overheads) as a % of Revenue fell to 48% of Revenue as the Group continues to leverage its growing scale.
EML GDV & Revenue Trends (in Mn) (Source: Company Reports)
Meanwhile, the stock price has fallen 12.65% over the past one month, however over the period of past 6 months the stock has given a substantial rise of 19.34%, if we look at the YTD performance, the stock is down by 23.68 %, thus the price trend indicates a very high volatility. Valuation-wise, the stock looks in good position with net margin of 4.2% and decent ROE. Moreover, the company has a track record of enhancing acquisitions with significant GDV, Topline and EBITDA Growth over the period. Taking into the account of current trading level and decent financials position, we uphold our “Speculative Buy” recommendation on the stock at the current market price of $1.510, up 4.14% on November 6, 2018.
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