Macquarie Group Limited

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Macquarie Group Limited (ASX: MQG) is a global financial services company and majorly operates in asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advice, access to capital and principal investment.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~18.38% of the total shareholding. MEREP Trustee and BlackRock Institutional Trust Company, N.A. are holding a maximum stake in the company at ~3.99% and ~2.70%, respectively.

1.4 Key Metrics: The company has reported growth in pretax return on asset (ROA), which increased from 1.6% in FY21 to 2.0% in FY22. Further, the proportion of the non-performing loan of total loans declined in FY22 to 1.22% from 1.90% in FY21. Below is captured the trend of the loan growth and pretax return on equity:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Results Highlights of FY22: During FY22, the company reported AUD 8,246mn of total income from America, which was up by 97% on a YoY basis. Further, total income from the Europe, Middle East and Africa (EMEA) region in FY22 was around AUD 3,511mn, which rose by 23% on a YoY basis, while total income from Asia declined by 20% on a YoY basis to AUD 1,137mn in FY22. However, the total income from the Australia region increased by 9% from AUD 4,031mn in FY21 to AUD 4,390mn in FY22.

2.3 1QFY23 Overview: The primary value drivers behind the company's 1QFY23 profitability were income from Green Investment Group (GIG) asset realisations under Macquarie's annuity-style businesses and better results across commodities platform under Macquarie's market-facing businesses.

2.4 Dividend History: The company declared a final dividend of AUD 3.500 per ordinary share (40% franked) in FY22, bringing the full-year dividends to AUD 6.220 per share. According to the company's dividend policy, the payout ratio will remain between 50-70% of the full-year profit attributable to its shareholders.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 20, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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