"MA Financial's share price is half its 2021 peak when interest rates were low and corporate activity was peaking. The company was also perhaps the biggest beneficiary of Australia's Significant Investor Visa (SIV) program, assets under management were increasing and hotel property values were recovering from COVID which had impacted one of its funds.
Earnings per share peaked at 45c, albeit it included property revaluations that won't be included on the income statement anymore, and fully franked dividends were increasing rapidly.
Three years later and interest rates are much higher, corporate activity is reawakening very slowly, the SIV program has been closed, the company is investing heavily to grow businesses like its MA Money lending business and earnings per share has almost halved.
We laud managers that sacrifice short term profits to grow profits faster over the long term, but it's anathema in the current momentum driven market.
If management's target for MA Money is realised in a couple of years, earnings per share could increase back to 45c, putting the stock on a price-to-earnings ratio of just 10. With that growth, the stock could easily double while we collect a 4.3% fully franked dividend yield before dividends are increased further by a shareholder friendly board."
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