Stocks’ Details

Australia and New Zealand Banking Group Limited

Demerger plans for 2019: Australia and New Zealand Banking Group Limited (ASX: ANZ) provides various banking and financial products and services.The bank has planned to demerge IOOF Holdings Limited, Zurich Financial Services Australia, Retail, Commercial and SME banking business in PNG region, and 55% stake in Cambodia JV ANZ Royal Bank in FY19. As per its 18 December 2017 buyback scheme, the group has bought back a total of 81,073,852 shares via on-market trade for the total consideration of A$ 2,25,52,67,919.16 till 25 January 2019. The group intends to buy back remaining shares with an aggregate consideration up to A$744,732,081.


FY18 Group Performance (Source: Company Reports)

During FY18, the bank reported a net interest margin of 1.87% which was slightly below the industry median of 1.94%. However, the Tier 1 Risk-Adjusted Capital Ratio was reported at 13.40% which has improved by 0.60% on an average of the last 5-years and is above the industry median of 11.13% showing that the bank's financial health is improving. The bank reported a higher dividend yield of ~6.1% as compared to the industry median of 5.4%.

During the last month, the stock has generated a positive yield of 10.51% and currently trading at the price level of $25.580 with an intraday decline of 2.329% on 29 January 2019. The Relative Strength Index is also visible in a neutral territory. With theimproving and better than industry margins, higher than industry dividend yield, and Demerger plans for FY19, we maintain our ‘buy’ recommendation on the stock at the current market price of $25.580.
 

Magellan Financial Group Limited

Interim dividend payment on 28 Feb 2019:Magellan Financial Group Limited (ASX: MFG) is an Australian financial company engaged in generating returns for its clients by investing in various global equities and global listed infrastructure companies. As per the latest updates of December 2018, the total FUM was reported at $70.782 billion with a net inflow of $41 million including the net retail inflow of $90 million, and net institutional inflows of $49 million. The company is expected to pay ~$54 million as distribution in January 2019 and an interim dividend on 28 February 2019.


Funds Under Management (Source: Company Reports)

Over the past few years, the margins of the company have been high and are reported above the industry median.It reported an EBITDA and Net margin of 78.0% and 47.0% respectively in FY18 as compared to the industry median of 61.9% and 30.3% respectively. Further, the company is generating better returns for its shareholders than its peers as it reported an ROE of 39.7% above the industry median of 9.9%.

During the last month, the stock has generated a positive yield of 19.06% and currently trading at the price level of $28.030 with an intraday decline of 0.285% on 29 January 2019. The Relative Strength Index is seen in the negative region with the price trading above the Simple Moving Average line (SMA) of the Bollinger band. With the improving and better than industry margins and the distribution of dividends in Feb 2019, we maintain our ‘Hold’ position on the stock at the current market price of $28.030.

Scentre Group

Mr. Elliott Rusanow, the new CFO:Scentre Group (ASX: SCG) is a real estate company established through the merger of Westfield Retail Trust and the demerger of Westfield Group. The company holds a portfolio of shopping centers in Australia and New Zealand. As per its Q3 2018 performance, it has achieved an occupancy rate of more than 99.5% across its portfolio showing a high-quality retail space demand. The Group reconfirmed its forecasted FFO growth for FY 2018 of ~4%. SCG is expected to pay a dividend of 22.16 cents per security for FY18. Mr. Elliott Rusanow has been appointed as the new CFO with effect from April 2019. It reported an annual dividend yield of 5.5%.

 
Active Developments (Source: Company Reports)

Over the past few years, the margins of the company have been high and are reported above the industry median.It reported an EBITDA and Net margin of 65.1% and 114.5% respectively in 1H18 as compared to the industry median of 63.9% and 104.3% respectively. Further, the company is generating similar returns for its shareholders as compared to its peers as it reported a similar ROE of 6.4% as compared to the industry median.

During the past three months, the stock has generated a positive yield of 2.57% and currently trading at the price level of $4.060 with an intraday rise of 1.754% on 29 January 2019.Hence, considering better results for FY18 along with the stable real estate markets and higher margins, we maintain our “Buy” recommendation on the stock at the current market price of $4.060.

Rural Funds Group

Dividends to be paid on 31 January 2019:Rural Funds Group (ASX: RFF) is a REIT company with a portfolio of Australian agricultural assets. The company is expected to release its 1H19 results on 21 February 2019 at 11:00 am AEDT. Further, the company will be paying a dividend of $0.026075 on RFF – Stapled securities fully paid on 31 January 2019. It has an annual dividend yield of 4.63%.


Upcoming key dates (Source: Company Reports)

Over the past few years, the EBITDA margin of the company has been consistent and is reported above the industry median whereas the net margin has been fluctuating and is reported below the industry median.During FY18, it reported an EBITDA margin of 81.5% as compared to the industry median of 65.4% and Net margin of 70.5% as compared to the industry median of 93.8%. Similar to net margin, the returns to shareholders of 9.8% in FY18 have been fluctuating over the past 5 years and is reported below the industry median of 11.1%.

During the past six months, the stock has generated a positive yield of 8.87% and currently trading at the price level of $2.210 with no change in price on 29 January 2019. Hence, considering the dividend to be paid on 31 January 2019 along with decent financials, we maintain our “Hold” recommendation on the stock at the current market price of $2.210 as the group intends to release its 1HFY19 financial results on February 21, 2019.


Stock Price Comparative Chart (Source: Thomson Reuters)  
 
 

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