Magellan Financial Group Limited

This report is an updated version of the report published on the 04 August 2022 at 3:44 PM GMT

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Magellan Financial Group Limited (ASX: MFG) is into global investment management & fund operations. The company's business segment includes Funds Management, Fund Investments, Magellan Capital Partners, and Corporate.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~34.60% of the total shareholding. Midas Touch Investments Pty. Ltd. and Magellan Equities Pty. Ltd. are holding a maximum stake in the company at ~11.35% and 9.30%, respectively.

1.4 Key Metrics: The net margin stood at 63.1% in 1HFY22 compared to 26.6% of the industry median. Below image depicts the trend of gross margin and total revenue since 2HFY20. 

Section 2: Business Updates, Financial Highlights & Dividend History

2.1 Business Updates:

 2.2 Results Highlights of 1HFY22 & MFG Funds Under Management: MFG generates cash from management and service fees of around AUD 368.79mn in 1HFY22, up from AUD 322.47mn reported in 1HFY21. The company reported FUM of AUD 60.2bn as of 29^th July 2022, under which the majority belongs to global equities of around AUD 33.0bn, followed by infrastructure equities AUD 18.9bn and Australian equities AUD 8.3bn.

Funds Under Management (FUM) Update as on 29th July 2022 is Highlighted Below:

2.3 Dividend History: MFG shows a clear track record of paying a dividend to shareholders. The company issued a dividend of AUD 1.101 per share in March-2022. Under the ongoing capital management initiatives, the management confirms the dividend policy that will follow a payout ratio of 90-95% of profit after tax from the group's funds management business.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: Pe/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 not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 04, 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

Kalkine New Zealand Limited is authorised to provide general advice only. The information on this website does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.