main interests of MAF

MAF (ex. Moelis) has an interesting (short) history.
Since its foundation in 2009 (as a JV of Moelis in Australia), it has successfully developed 3 businesses :
- corporate advisory, initial business, which now representing 15 % of their EBITDA,
- asset management, now their core business, representing 71 % of their EBITDA,
- lending, most recent business, now 14 % of their EBITDA.

The market still struggles to value MAF given the rather volatile trend for their results.
Obviously, this is a strong growth company, looking at the CAGR FY14-FY20 for their underlying revenues (+ 27 %/year), EBITDA (+ 31 %/year), NPAT (+ 58 %/year) and EPS (+ 41 %/year).
Since its listing in April 2017, the stock has been quite volatile for 1 main reason : results have been disappointing both in FY19 and FY20, with no growth of their EPS during that period : largely explained by covid for FY 20 and investment in hiring executives for their asset management business in FY 19.
Since the beginning of FY 21, MAF stock has benefited from a large re-rating, mainly due to constant upward revision to its earnings, from 10 to 20 % EPS growth initially to more than 40 % now.

The main question is probably to wonder if the company can return to its past earning growth (annual EPS growth of 40 % per year) on a regular basis.
For now, the company has already announced a forecast of 15 to 25 % EPS growth in FY 22, including 5 % impact of Finsure acquisition.

Looking at existing trends for their 2 main businesses (asset management and lending), the company has probably a real potential to sustain a strong growth, looking at the large net inflows (and pipeline).

So, the question is more about the main risks :
- the volatility of the corporate advisory business (risk now more under control, as it represents only 15 % of their earnings),
- the one offs/volatile elements in their asset management business.

The company is doing a good job at derisking their asset management business :
- initially high risk business, as mainly dependant on SIV program,
- the asset management business is now less risky for several reasons :
. foreign HNW just represent 50 % of their AUM, as they also gained institutional customers, as well as domestic HNW and retail,
. even their foreign HNW business has proved to be quite stable, as they were able to keep most of these customers once they exited the SIV program (4 years initially, 5 years since 1/7/21). Now they get around 1/3 of the net inflows of foreign net inflows out of the SIV program.
- also interesting to see that, while most of their AUM comes from real estate and hospitality (together 63 % of their AUM), most of their net inflows come from credit and equities (together 73 % of the net inflows in H1 21 vs 57 % in H1 20).

Overall, it is probably quite optimistic now to expect them to return to their previous rate of EPS growth (40 %) on a regular basis.
Anyway, the stock is now valued at a PE 22 of around 20, which does not reflect such a high growth scenario.
If the company continues to revise upwards its earning guidance, there is upside for the stock, from higher PE and higher EPS.

There is probably room for further good acquisitions and development of new businesses, looking at the company's track record.
Given their hints, next developments could be into equities and private equity/VC.
Also good to note that the staff has a high level of interest in the company as it owns around 35 % of the capital.