Platinum Asset Management Limited

Investment Performance Largely Supported FUM Growth: Platinum Asset Management Limited (ASX: PTM) ended FY 2018 with total funds under management or FUM of A$25.7 billion which reflects a growth of 13.1% on the YoY basis.The growth in the FUM was primarily supported by the robust investment performance. However, in FUM the effects related to the net distributions as well as net fund inflows were also witnessed. The contribution of around $1 billion was witnessed on the back of net fund inflows and, on the other hand, net distributions have led to a fall in FUM of around $1.5 billion.

PTM’s FUM and Revenue Growth (Source: Company Reports)

Subdued Performance in FY 2018: The key financial ratios have witnessed a decline in FY 2018 on the YoY basis. The company posted EBITDA margin (Earnings before interest, tax, depreciation and amortization) of 75.5% in FY 2018 reflecting a fall as in FY 2017 it was 80.8%. The net margin of the company has also witnessed a decline. In FY 2018, net margin was 55.7% representing a fall from 59.5% in FY 2017.

Volatility, Trade Worries to Weigh on Performance: The performance of Platinum Asset Management Limited is expected to be impacted by the worries related to the trade battle which could infuse volatility in the stock markets. The company ended October 2018 with FUM amounting to $24.7 billion implying a fall from the level it was at the end of June 2018. This fall was witnessed primarily because of unfavourable momentum in the investment returns. However, as per the AGM presentation, the company’s team has been working to tap opportunities available in the markets as well as the company would also make deployments in regard to the processes, people as well as technology.  
Additionally, the global markets might witness negative momentum is the escalation of the trade wars occurs which could also negatively impact the performance of Platinum Asset Management Limited.

From the technical standpoints, two technical indicators, Moving Average Convergence Divergence or MACD and Exponential Moving Average or EMA, have been applied on the daily chart of Platinum Asset Management Limited and default values have been considered. As per the observation, the MACD line has crossed the signal line. Immediately after the crossover, even though the MACD line has moved upwards, it has started to move downwards. Secondly, the stock price has crossed the EMA and is moving downwards. Also, the company’s performance might get impacted because of concerns related to the downturn in the global markets. Therefore, the market players can avoid this stock at the current market price of A$5.260 per share. 
 

Macquarie Group Limited

Market Movements, Foreign Exchange Supported Macquarie Investment Management: Macquarie Group Limited (ASX: MQG) ended H1 2019 with total net operating income amounting to A$5.8 billion which implies the YoY growth of 8%. This growth in the net operating income was supported by the increased trading income and net interest, commission income and increased fees. However, lesser credit as well as other impairment charges also helped the total net operating income.

MQG’s Key Metrics (Source: Company Reports)

In the Macquarie Investment Management business, the company had AUM or assets under management of A$363.6 billion which implies a rise of 9% as compared to March 2018. This growth was witnessed primarily because of favourable movements in the markets as well as in foreign exchange. However, ValueInvest Asset Management S.A. acquisition also mainly helped in the growth of the AUM.  

Ability to Adapt, Expertise to Support MQG: When MQG made an announcement about the results for H1 2019, it stated that the company’s outlook on the short-term basis would be dependent upon several factors some of which include market conditions, foreign exchange impact, income from different geographies as well as regulatory changes. However, as per the management, the company is all set to witness favourable momentum in the medium-term. The company would be helped by the conservative as well as robust balance sheet.   

The efficiency ratio of MQG has improved on the YoY basis. At the end of FY 2018, it was 71.3% while in FY 2017 it was 70.7%.  

Stock Analysis: On the daily chart of Macquarie Group Limited, two technical indicators have been applied i.e. Moving Average Convergence Divergence or MACD and Exponential Moving Average or EMA. As per the observation, the MACD line has crossed the signal line, and even though it witnessed upward momentum, it is presently moving downwards. According to EMA, the stock price has crossed the EMA and is moving downwards. Therefore, the market players need to watch the stock at the current price of A$113.410 per share.
 

Magellan Financial Group Limited 

Robust Performance in FY 2018 Supported by Growth in Average FUM: In FY 2018, Magellan Financial Group Limited (ASX: MFG) witnessed robust growth momentum in regard to the management and service fees as well as funds under management. The company’s average FUM ended FY 2018 at $59 billion representing the rise of 29% on the YoY basis. The company’s management and service fees amounted to $385.8 million reflecting YoY growth of 26%.
 
Revenue Growth Drivers of MFG (Source: Company Reports)

With respect to the company’s funds management business, there has been favourable momentum in regard to management, services as well as performance fees in FY 2018. This growth was helped by the existing FUM, net inflows as well as Airlie acquisition.   

Marginal Rise in Expenses Moving Forward: When Magellan Financial Group posted the results related to FY 2018, the company gave outlook in regard to the expenses. As per the presentation, the company is expected to incur expenses amounting to around $105 million in FY 2019. The management of the company had reflected favourable views regarding the performance in FY 2018.

The company has managed to wrap up the Magellan Global Trust’s IPO or initial public offer. The management also stated that they have done acquisitions of Airlie Funds Management as well as Frontier Partners.  

Stock Analysis: On the daily chart of Magellan Financial Group, Moving Average Convergence Divergence or MACD has been applied by considering the default values. The MACD line has crossed the signal line and is moving upwards. The crossover can be regarded as the bullish crossover. As a result, we maintain our “Buy” rating on the stock at the current price of A$26.550 per share.   
 

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