Platinum Asset (Investment) Management Limited (ASX: PTM)

PTM Details

Strong Funds under Management: Up 4.3% on January 10, 2018, Platinum indicated that performance of funds managed by the group increased from $27,024m to $27,104.6m from 30, November 2017 to 30 December 2017. The group had invested in different kinds of funds like C-class which is a standard free option, another is P class which is performance fee option. It also invested in Platinum Global Fund and in other listed investment companies like Platinum Capital Limited and Platinum Asia Investments Limited. Platinum also confirmed that its investment manager and cornerstone investor, Platinum Investment Limited (PIML) sold 20 million pf PIML’s ordinary shares in Platinum Asia Investments (PAI) at a price of $1.22 per share, via a block trade and PIML still retains an investment of 30 million shares in PAI. 2017 was a very strong year from investment aspect which continued for the first four months of FY18. Negative net funds which were recorded in FY17 have now been reversed and now there were four consecutive months of net fund inflows. In FY17, PAT was $186mn, down by 7%. Its staff costs also increased in FY17 by $3.8 million which was due to an increase in variable incentives. The group declared a fully-franked final dividend of 15 cents per share and has been confident that future dividend will continue to be fully-franked. A new performance fees option for the Platinum Trust Funds was also introduced as it provided a lower base fee at a rate of 1.10% per annum plus a performance fee of 15% of the outperformance of the relevant benchmark returns. It is expected that the performance fee income can be volatile and the performance fees of around $18 million for six months has been forecasted. The stock price has increased by about 58% in the past six months (as at January 09, 2018) and is at higher levels. We give an “Expensive” recommendation on the stock at the current price of $8.27


PTM Daily Chart (Source: Thomson Reuters)
 

Magellan Financial Group Ltd (ASX: MFG)

MFG Details

Distribution Payment: Magellan came out with the funds performance report which reflected that MFG experienced net inflows of $539 million which included net retail inflows into Global Equities of $3 million, Infrastructure Equities of $41 million and net institutional inflows of $495 million. While the total funds under management slipped slightly to $57,870 million on a month-on-month basis, the overall performance has been decent.
 

Funds Under Management Performance (Source: Company Reports)
 
It will pay the distributions of approximately $45 million in January and it is also entitled to a performance fees of approximately $9.6 million for the six months. The group earned $1.141 per fully diluted share and also paid fully franked dividend per share of $0.856, and this was against the respective figures of $1.155 and $0.893 for the last financial year. Its funds management earning before tax increased by 15.5% over the year which is broadly in line with the increase in the average Funds Under Management over the same period. It is expected that the group will continue to have a pay-out ratio of between 75-80%, but this ratio will be based on the after-tax profit of the funds management business but excluding performance fees. FY18 performance is expected to be driven by its self-directed strategy with investments of about $11-$11.5 million for marketing purposes. Up 4.69% on January 10, 2018, the stock is expected to witness more upside potential. Looking at the overall scenario, we recommend a “Buy” at the current price of $27.70


MFG Daily Chart (Source: Thomson Reuters)
 

Macquarie Group Ltd (ASX: MQG)

MQG Details
Annuity Investing a strong driver: Macquarie Group was found to be selling its 11.5% stake in ASX-listed toll-road company Macquarie Atlas Roads Group and announced a block trade. Macquarie had called for the bids for 76 million shares starting from $5.80 per share to a maximum of $6.10 per share. This was due to the reason that Macquarie group is set to lose the rights to manage the toll-road company. The group’s annuity-style businesses are the key drivers of its earnings growth and the overseas market exposure can open-up many opportunities. On the other hand, lower management fees might impact performance going forward. The stock is trading at higher levels and we believe it is “Expensive” at the current price of $101.93


MQG Daily Chart (Source: Thomson Reuters)

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