Financial Stocks News and Tips on the ASX.
Share to buy – Magellan Financial (MFG)
MFG's recent numbers speak for themselves:
- 41% increase in profit
- 38% increase in dividend
- exceptional net inflows and a reduction in employee expense to income
Technically, after a sharp pullback the stock found support around $20 and has bounced strongly.
The recent bullish candle was a confirmation candle and a signal that traders should be happy to buy into.
Share To Buy – Bank Of Queensland (BOQ)
Bank of Queensland (BOQ) is a financial institution, with services spanning retail and commercial banking, wealth management, insurance and equipment finance. As its name implies, BOQ predominantly caters to the Queensland market but has branches throughout Australia. FY13 results Much of BOQ’s recent strong share price performance has come on the back of its FY13 results. Cash profit surged to $250.9 million, from $30.6 million a year earlier. The bottom line turnaround was driven by a major decline in impairment charges from $401 million in FY12 to $112 million in FY13. This reflected a dramatic improvement in asset quality (by exiting weak and impaired assets). Net interest margin (NIM) grew from 1.65% to 1.7%, continuing a positive trend from FY09 when NIM was 1.6%. FY13’s NIM growth came on the back of a more favourable funding mix, which has also positioned BOQ to boost lending volumes in what remains a highly competitive mortgage market. There was also good cost control, with the cost-to-income ratio falling to 44.3%. This exceeded the initial guidance of 45% due to the successful implementation of efficiency and effectiveness programs. Outlook Management has targeted return on tangible equity (ROTE) of 13%+ by FY15. FY13 ROTE was 11.9%, well in excess of the ~10% initial guidance. Due to a combination of falling impairments, rising net interest income and disciplined cost control, we think the 15% ROE target will be achieved by management. The one area of concern was the retail lending growth of 0.6x system growth during FY13, this below the 1.2x target aimed for by FY15. Yet, as we mentioned before, the rise in NIM and dramatically improved asset mix gives the group flexibility to boost lending volumes ahead of FY15. The FY13 result was robust in nearly all areas, and expectations for a continuation of this momentum into FY14 are likely to provide a further boost to BOQ’s share price. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Henderson Group HGG Heading Higher
Henderson Group (HGG) is a UK-based fund manager, listed on both the Australian Stock Exchange and the London Stock Exchange. The group employees over 1100 people worldwide are a member of the FTSE 250 index and the S&P/ASX 200 index. HGG specialises in a number of investment styles and asset classes, including equities, fixed income, property and private equity. Its client base ranges from institutional to retail and high net worth individuals. As of June 2013, the group held £67.9 billion of funds under management. Key Points: > 1H13 underlying profit before tax increased was £101.1 million pounds, a 22% increase on the 1H12 result > Operating margins expanded 260 basis points on the previous corresponding half > Funds under management increased 7% year on year to £67.9 billion > 73% of funds exceeding benchmarks, helping the group generate an extra £35.3 billion in performance fees, which was one of the key drivers in the aforementioned results > Group has no debt with a £16.7 million net cash position > HGG and Teachers Insurance and Annuity Association -College Retirement Equities Fund ("TIAA-CREF") have agreed to combine their European and Asian real estate businesses to form a leading real estate venture, TIAA Henderson Global Real Estate, with assets under management of approximately £13.0 billion. > HGG to receive £114.2 million for assets and will own 40% of new entity to be named TIAA Henderson Global Real Estate Conclusion HGG’s 1H13 results were impressive; we view underlying profit growth coupled with margin expansion an encouraging sign. We view the group’s sale of its property entity as a real positive, as it will allow focus on expanding its core investment management business of Global Equities, European Equities, Absolute Return, Multi-Asset and Global Fixed Income. In addition to the increased focus on core businesses, it will strengthen the group's balance sheet, possibly allowing for additional capital return in the form of a share buyback or special dividend. Henderson Group was listed as a buy share for our members on August 15th. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Collection House Limited (CLH) Share Tip
Collection House (CLH) is an emerging debt collection agency, primarily focused on debt purchasing and debt collection. CLH also boasts other services such as legal/insolvency divisions but it has made its name and grown its business in recent times through expanding its portfolio of purchased debt ledgers (PDLs). The company makes money from PDLs by buying out other company’s list of debtors (people who owe money) and then chase up the money owed. Eventually, CLH tends to collect just over double the amount it invests in buying out the debts. The company essentially uses money generated by collections to purchase more PDLs, providing a self-funding cycle. Increased investment in PDLs over the last couple of years has driven the company’s fortunes, with profit growing by 43% in the last two years. We expect this growth to continue, with its other operations helping to offset any cyclical patches. From strength to strength We covered CLH as a buy late last year as the stock was poised to breakout above $1. At the time, the company’s most recent results (FY12) delivered a fifth straight year of growth in profits, dividends and shareholders equity. Since then, the company has released its 1H13 results which showed further growth. For the first half of CLH’s financial year, profit rose to $8.1 million (up 27% on the year before), EPS rose to 7.3c (up 14%) and the company paid a dividend of 3.6c (up 13%). All this was achieved on just an 8% rise in PDL collections and commissions, indicating the company is improving its efficiency and reducing costs. Collection House was listed as a buy share for our members on July 11th. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
ANZ BANK (ANZ) Share To Buy
ANZ Banking Group (ANZ) is the nation's third-largest bank by market capitalisation, and is among the top 50 banks in the world. The group provides a variety of banking and financial products and services to around 8 million customers, and employs 48,000 people worldwide. ANZ operates in Australia, New Zealand, Asia, the Pacific, the Middle East, Europe and America. In recent years the group’s strategy has shifted to become a super-regional bank. To this end, the bank is aiming for between 25-30% of its earnings to come from its Asia, Pacific, Europe and America Division (APEA) by 2017, with the major focus being the high growth Asian region. Falling AUD helping bottom line The recent sharp fall in the Aussie dollar is expected to benefit ANZ more than the other big banks. The slide in the Aussie dollar is largely due to the US Federal Reserve’s plans to scale back monetary stimulus, which contrasts with the RBA’s own easing bias. The group has the heaviest exposure to Asia through its APEA strategy, so the fall in the currency will lead to positive currency translation. APEA now represents 16% of the group‘s operating income mix, on par with New Zealand. Therefore, a lower Aussie dollar will have a noticeable impact on the bottom line. An additional factor we expect will support ANZ is its $425 million share buyback, launched last month. Whilst the amount represents less than 1% of ANZ’s market capitalisation, it nonetheless remains a vote of confidence in the business by management and given the group’s strong capital position, there is the prospect for an increase in the buyback. 1H13 earnings ANZ’s 1H13 results were impressive, with cash profit of $3.2 billion 10% higher than the prior corresponding period. Return on equity increased by 80 bps to 15.5% driven by earnings growth and initial benefits from a focus on capital efficiency. The highlight of the result was the group increasing the dividend payout ratio from 65% to the upper end of a 65% to 70% range. This led to an 11% jump in the interim dividend to $0.73. The big four banks’ dividend yield was a key plank of their share price surge of the past 12 months. Their pullback in May and June reflected a dramatic run-up in earnings multiples and a significantly reduced dividend yield. Below we graph the chart of ANZ’s one year forward P/E and dividend yield since July 2012. As we can see, the dividend yield fell sharply from 6.5% to below 5% in early May. Moreover, the P/E surged from below 10.5x to almost 14x in that time. These measures converged in recent months as the stock corrected but have begun diverging once more. In our view, investors looking to take advantage of the cheaper valuation and higher dividend yield will lead to further share price gains in the near-term Outlook ANZ’s dividend yield coincided with a huge rally in its share price over the past 12 months. It was no surprise its shares pulled back in response to its stretched valuation. The stock’s forward P/E is now a more reasonable 12.6x and has been drifting higher in recent weeks as the 5%+ dividend yield entices investors back into the stock. ANZ Bank was listed as a buy share for our members on July 10th. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.
Magellan Financial Group Limited (MFG)
Magellan Financial Group (MFG) is an Australian based specialist fund management group. The group is involved in the development of globally focused investment funds for both retail and institutional investors. The company has three main investment funds:
> Magellan Global Fund - a long-only unit trust that invests in a concentrated portfolio of global equities. > Magellan Infrastructure Fund - a unit trust specialising in investing in global infrastructure securities with the aim of providing consistent long-term absolute returns which exceed the risk adjusted returns expected from the asset class. > Magellan Flagship Fund Limited - an ASX listed company (MFF) which invests in a concentrated portfolio of high-quality global equities. > Magellan Global Fund - 10% of the excess return above the higher of either the MSCI World Index Total Return in AUD and the 10 year Australian Government bond rate. > Magellan Infrastructure Fund - 10.1% of the excess return above the higher of either the UBS Developed Infrastructure and Utilities Net Total Return Index (AUD hedged) and the 10 year Australian Government bond rate.
ANZ Bank – Asia Helping Drive Growth
ANZ Banking Group (ANZ) is the nation's third-largest bank by market capitalisation, and is among the top 50 banks in the world. The group provides a variety of banking and financial products and services to around 8 million customers, and employs 48,000 people worldwide. ANZ operates in Australia, New Zealand, Asia, the Pacific, the Middle East, Europe and America. In recent years the group’s strategy has shifted to become a super-regional bank. To this end, the bank is aiming for between 25-30% of its earnings to come from its Asia, Pacific, Europe and America Division (APEA) by 2017, with the major focus being the high growth Asian region. China manufacturing in expansion mode For much of the early part of 2012 the discussion surrounding China was whether it was heading for a hard landing or a soft landing. The fears of a hard landing abated by the end of 2012’s second half, helped by China’s central bank adopting an easing bias towards monetary policy. Measures including lower interest rates and targeted fiscal stimulus appear to be flowing through to China’s manufacturing sector, which is beginning to expand after an extended period of contraction. Last month, the HSBC Flash PMI showed factory activity accelerated to a two year high in January. A pickup in manufacturing activity is important for ANZ as it implies Chinese companies are taking advantage of easier credit conditions and borrowing money in order to expand. What to look for in trading update ANZ’s FY12 results revealed a 2.6% increase in FY12 cash profit to $5.75 billion. The APEA strategy also continues to be a key driver for ANZ’s overall business. In FY12 this region’s income comprised 21% of overall profit, putting the group on track to achieve its aim for APEA to contribute 25% - 30% of overall profit by 2017. Today CBA reported a 6% on-year rise in 1H13 cash profit to $3.78 billion. Impressively, the result came on the back of a 6% increase in revenue. The group’s net interest margin rose 4 basis points from the previous half, in a sign wholesale funding pressures are easing for the four majors. CBA’s first half results are a healthy indicator for the industry, and we expect ANZ to announce a similarly positive result when it provides a trading update for the first quarter later this week. Outlook ANZ’s FY12 results provide it with a good base to tackle FY13, and we expect some good news in its first quarter trading update. We will look for an improvement in interest margin and asset quality, as well as a cash profit driven by good cost control and evidence of top line growth. The group’s exposure to Asia will continue to be an important earnings driver, and the benefits of this leverage will translate to further share price appreciation in our view. This article was distributed to our members on February 11th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only ANZ but all our current trading ideas. Simply click here and starting trading today.
ANZ Bank Riding China’s Coat Tails
ANZ Banking Group (ANZ) is the nation's third-largest bank by market capitalisation, and is among the top 50 banks in the world. The group provides a variety of banking and financial products and services to around 8 million customers, and employs 48,000 people worldwide. ANZ operates in Australia, New Zealand, Asia, the Pacific, the Middle East, Europe and America. In recent years the group’s strategy has shifted to become a super-regional bank. To this end, the bank is aiming for between 25-30% of its earnings to come from its Asia, Pacific, Europe and America Division (APEA) by 2017, with the major focus being the high growth Asian region. FY12 results ANZ’s FY12 results were good without being great. The banking major recorded FY12 statutory profit of $5.7 billion, up 6% from the FY11 result. An increased capital base saw EPS only rise by 2% year on year, to 213.4 cents a share. Dividend growth over the financial year managed to outpace inflation, with a 4% increase to 145 cents a share. We were most impressed with direction of the group’s super-regional strategy.As the above shows the group managed to grow the income from APEA by 5% over FY12 to 21%. Notably the group also managed to slow down operating expense growth in the region from 11% to 4%. The group’s APEA strategy continues to be a key driver for ANZ’s overall business results and we think this will continue as the group strives for a contribution of 25% - 30% of overall profit by 2017. China expanding again! For much of the early part of 2012 the discussion surrounding China was whether the slowdown in growth would be a hard landing or a soft landing. The fears of a hard landing abated by the end of the second half, helped by China’s central bank adopting an easing bias towards monetary policy. The central bank actually began its stimulus measures in December 2011 when it implemented the first of a series of reserve requirement ratio (RRR) cuts. After cutting the RRR by 1.5% the PBOC then cut the country’s official interest rate by a little over 0.5% in the months of June and July. These stimulus measures have began to show signs of flowing through to China’s manufacturing sector, which was the cornerstones of the country’s explosive growth of the last 10 years. The month of November saw the HSBC Flash Manufacturing Index return a reading of over 50 for the first time in 12-months, indicating the sector had returned to expansion. Every month since that return to expansion was followed by an increase in the index, with yesterday’s reading of 51.9 marking a 24-month high. Outlook ANZ’s FY12 results provide it with a good base to tackle FY13. The year was not an easy one for the global banks in general, with the eurozone crisis leading to higher funding costs, which increased pressure on bank interest margins. ANZ’s net interest margin contracted 11 basis points over the year. That being said, it was the group’s exposure to Asia that allowed it to grow earnings. We believe that ANZ’s leverage to the growing Asian region will continue to benefit the company and this is expected to result in further share price appreciation. This article was distributed to our members on January 25th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only ANZ but all our current trading ideas. Simply click here and starting trading today.
Buying The Big Bank CBA
Commonwealth Bank (CBA) is the nation’s largest bank by market capitalisation, holds the greatest amount of deposits, the most home loans, and also controls a fair chunk of the wealth management market through Colonial First State. The bank also operates Australia’s largest discount online brokerage operation, Commsec, as well as a multitude of international operations. Importantly, the bank has used its size to grow even bigger over the years. While many financial institutions collapsed over the global economic downturn – or neared collapse – CBA used its massive deposit base to maintain funding and buy depressed assets. The banking giant also has diverse exposure geographically with stakes in several banks in the fast growing China. 1Q13 Trading Update Despite facing slowing credit growth, CBA was still able to generate solid earnings growth in 1Q13. The group reported a 1Q13 statutory profit of $1.8 billion. Unaudited cash profit, a measure more reflective of underlying performance, was $1.85 billion, a 5.7% increase on the prior corresponding quarter. A breakdown of the results revealed net interest margins (NIM) were broadly stable in the quarter, relative to 2H12 NIM of 2.06%. The company noted that asset repricing impacts were largely offset by continued deposit pricing pressures. The company’s’ trading income improved to a level consistent with the company’s long-term average run-rate, the result was also helped by a positive Credit Valuation Adjustment. CBA’s asset growth was mainly a function if of increased retail deposits, which now make up of 63% of the group’s total funding. The Australian Retail division had a particularly good quarter, with improved lending margins, improved credit quality and good growth in customer numbers at its Bankwest subsidiary. The Wealth Management and Insurance division produced solid volume growth, with Funds under Administration and Funds under Management growing by 6% and 4% respectively. Insurance premiums grew by 3%, with cross selling to the banks retail customer base showed signs of improved penetration. With regards to CBA’s other division, the bank said most were trending at similar run rates to the 2H12. Looking ahead CBA’s quarterly update was solid, with a clearly improved tone from previous periods. Although the company did note slower revenue growth, it did increase profits by over 5%, this is an indication that the group has been able cut its expenses to cover for any reduction in revenue. On a return on equity (ROE) basis, CBA does look attractive to its major rivals, with an average (ROE over the last three years of 17.6%, which is over 1% higher than any of its rivals. Overall we expect a continuation of growth for CBA’s earnings in the current quarter, and this should hopefully translate into continued share price appreciation. This article was distributed to our members on November 30th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only Commonwealth Bank but all our current trading ideas. Simply click here and starting trading today.
Macquarie Group Limited (MQG) Stock To Buy
- Macquarie Capital: Which includes corporate advisory, equity, debt and private capital markets businesses, and undertakes principal investing - Macquarie Securities: Activities include institutional and retail derivatives, structured equity finance, arbitrage trading, synthetic products, capital management, collateral management and securities borrowing and lending - Fixed Income: Currencies and Commodities: Provides a variety of trading, research, sales and financing services across the world with an underlying specialisation in interest rates, commodities or foreign exchange - Macquarie Funds Group: Full-service asset manager - Banking and Financial Services: The primary relationship manager for Macquarie Group’s retail client base - Corporate and Asset Finance Group: The lending and leasing business of Macquarie Group
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Nov 2014 - Nov 2016
Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 23.58%*
DISCLAIMER: *Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014 *Return figures are gross returns and do not take into account fees or brokerage costs. *Returns are calculated based on a $50,000 hypothetical portfolio, risking 2% of the overall portfolio balance ($1,000) as a starting point for each trade. *Due to slippage and gapping, losses can sometimes exceed $1,000 on an individual trade. *Opening and closing prices for trades (and therefore the prices used for determining aggregate profit/loss) will be those published on the Australian Stock Report website and will be determined by the price at which they could realistically be executed in the market at the time the recommendation is published. *ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015
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