Think you are missing the big one and that’s fees. They can no...

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thebarry111

4,587 Posts.

569

13/09/21

20:25

Post #: 56032133
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Originally posted by Joffrey: ↑

Adjusted earnings are 419m if you add back the Barrenjoey/GYG/FC start up costs, as well as costs with restructuring the flagship fund. add back 154m to statutory profit & 419m is the current earning power which is confirmed by Morningstar. Currently 7.2b market cap and MFG has about 200m net cash over debt giving an EV of 7b. 7b / 419m is 16.7. That's quality value in my opinion as that earnings multiple doesn't account for future earnings generated by GYG and Barrenjoey. I also imagine their will be more investments like this within the newly created Magellan Capital Partners reporting segment, I just hope they dont try to roll out so many at once. Makes me nervous when management try to do too much at once.

Although the bulk of earnings will still come from the FM business. BJ FC and GYG have been booked as investments in associates at cost for 230m which is half of what Magellans fund business will earn in a single year. MFG doesnt report net inflows and outflows, just FUM which is annoying. Although if you lot at the most recent FUM update, I reckon there was a net outflow & FUM only increased with market value.

Still overall, this is my biggest holding & I took advantage of the sell off to add more. Ill keep averaging down.

with our mandated super system, owning the best FM business in the country is a no brainer.

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Originally posted by Chella: ↑

my point is UBS forecast for FY 2022 is $2.27 EPS . In FY 2021 MFG earned $2.25 EPS on average funds of $103.5. Current funds are A$117B. So if you calculate on A117B EPS will be $2.60 or so. On top of it if Barrenjoey do well there won’t be losses for FY2022. That is further .22EPS for 2022FY. So on a such discrepancy on forecast, you will have a low valuation like UBS. On the question of fund outflows. It takes place if the fund is performing badly compared to others for long time. If you take FY 2021 that happened to MFG, but only 330M on 117B. That is why all the talk about relative performance. Any bad news is gold for media as people are glued to that bit information. I just did comparison from end of Feb 21 to now. MFG total fund of 117B outperformed MSCI by 2%. Why would people leave MFG fund? And go where? Did the institutional investors leave? No. Presumably they will analyse and find out MFG did badly during opening up after Covid and take it in the chin and move on. It is easy to to put up bad things at headlines, otherwise nobody will read the stuff written in the media. I am interested in numbers which are analyse rather than headline stuff. Of course I am not going to change market perception until next set of numbers come out. My numbers are based no major market eruption in world stock market.

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Think you are missing the big one and that’s fees. They can no longer justify charging over 1% on fees and paying themselves crazy performance fees. Competition is heating up in this area and they have shot themselves in the foot.

MFG Price at posting: $39.48 Sentiment: Sell Disclosure: Not Held
3 Upvote

0 Great analysis

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