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Author: share-tips   |   Latest post: Fri, 30 Aug 2019, 2:28 PM

 

Shares to buy: Macquarie Group Ltd. (ASX: MQG)

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About the Company

Macquarie Group Ltd. (ASX: MQG) offers banking, financial advisory, investment and funds management services. The Company offers financial advice, cash management, wealth management and private banking, life insurance, securities brokerage, corporate debt financing, real estate funds management, real estate development financing, investment funds management, and foreign exchange services.

Our View

Macquarie Group are a diversified financial services business with global operations serving the full spectrum of customers from individuals, SMEs and Large Corporates. Their mainstay businesses include Asset Management (Top 50 Global Asset Manager), Asset Finance (across a number of industries including aircraft and motor vehicles), Banking and Financial Services (including Personal and Wealth Management), Securities (including sales, research and equity capital markets), Capital (including M&A and principal investments) and Commodities and Financial markets (providing clients with risk and capital solutions).

The company has evolved over the past couple of decades from very large principal investments and higher exposure to cyclical components (eg securities and equity capital markets) to now focussing on annuity style businesses. This has been evident over the past couple of years with various asset finance businesses purchased including aircraft leasing. The search for more stable income streams should lead to greater certainty for group earnings and potentially multiple expansion over the coming years as investors become more comfortable with their more stable earnings streams. This is evident by the contribution to net profit from the annuity businesses which has now grown to over 70%. On the cyclical side, the main contributor to profitability has been on product development for commodities and financial markets. The company provides financing and risk products for their clients while at the same time hedging out risk through the use of derivatives. As commodity markets have fallen with increased volatility, they have been relatively successful in capturing profits. The other more cyclical businesses related to equity securities and capital markets will always have bouyant times and with strong cost management will provide abnormal returns.

Source: HALO Technologies – 10:30am AEDT, 30.08.2019

The post Shares to buy: Macquarie Group Ltd. (ASX: MQG) appeared first on Australian Stock Report.

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