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