MQG - Macquarie Group

[michael_selway]

Re: MBL - Macquarie Bank

And now watch as mac.reaches 60 dollars on the back of this news :swear:

what do u guys think of BNB or RCD as opposed to MBL?

thx

MS

 

[bug]

Re: MBL - Macquarie Bank

It could be argued MBL offers the greatest opportunity as it embarks on its next stage of development - the bank has been significantly bulking up its international staff, earnings and deals the last two reporting seasons, which will continue to be the case in subsequent periods.

Compared to the smaller players - BNB, RCD and MFS - who do similar activities on a more specialised scale, MBL has been able to diversify itself strongly in a commanding breadth of activities/products,
as well as increasingly expanding where it does business around the globe. MBL's exposure to market downturns should be mitigated as it gains this access to the greater range of deals and opportunites world-wide.

This should represent the next watershed of growth, as MBL's international income moves beyond its current 50% level. The previous growth came from large infrastructure deals in Australia, which have lost prominence in MBL's growth profile.

All of MBL's seven key divisions are firing. Offshore earnings also rose 59 per cent in the result just announced. The bank's long term growth seems assured as it builds on already strong foundations.

 

[michael_selway]

Re: MBL - Macquarie Bank

It could be argued MBL offers the greatest opportunity as it embarks on its next stage of development - the bank has been significantly bulking up its international staff, earnings and deals the last two reporting seasons, which will continue to be the case in subsequent periods.

Compared to the smaller players - BNB, RCD and MFS - who do similar activities on a more specialised scale, MBL has been able to diversify itself strongly in a commanding breadth of activities/products,
as well as increasingly expanding where it does business around the globe. MBL's exposure to market downturns should be mitigated as it gains this access to the greater range of deals and opportunites world-wide.

This should represent the next watershed of growth, as MBL's international income moves beyond its current 50% level. The previous growth came from large infrastructure deals in Australia, which have lost prominence in MBL's growth profile.

All of MBL's seven key divisions are firing. Offshore earnings also rose 59 per cent in the result just announced. The bank's long term growth seems assured as it builds on already strong foundations.

Yeah MBL has the most diversified. However EPS growth % pa wise may not be as good as the others? Larger base now as it once was?

MBL - Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 382.3 436.2 452.0 489.0
DPS 215.0 238.0 260.0 285.5

BNB - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 77.0 95.0 116.1 138.2
DPS 23.0 29.1 36.5 43.7

RCD - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 32.0 49.3 56.7 64.7
DPS 30.6 42.0 49.0 55.0

MFS - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS -6.8 24.4 30.1 37.3
DPS -- 13.5 18.0 22.5

thx

MS

 

[bug]

Re: MBL - Macquarie Bank

It could be hard to say who the actual EPS winner will be, based on which company gets the most deals and whether their markets go sour at all.

The smaller companies are coming off a numerically smaller growth base, while MBL is building more international scale to take advantage of bigger deals to boost its EPS. MBL should have the ability to do even more of what its smaller rival BNB is doing:
BNB announced its latest earnings upgrade on Friday, after clinching its sizeable eircom takeover and socking away the related fees from the transaction.

BNB has started making noises about Australian investors not supporting its infrastructure fund (BBI), and that it will be setting up more international specialist funds and conducting its own capital raising. Does the strategy sound familiar? MBL has got a head start on the types of big international deals needed to boost EPS growth meaningfully. MBL itself has good scope to grow internationally, to reach the heights of the very large overseas investment banking firms.

MBL is a more mature operation, and should provide a bit more 'safety' when markets turn down. BNB, for instance, is proving more volatile, causing the sharper paring back of its price gains whenever the market adjusts. When the investment banking markets eventually become less friendly to growth, this will challenge the ability of the smaller, less well-established players to produce strong EPS growth.

 

[michael_selway]

Re: MBL - Macquarie Bank

It could be hard to say who the actual EPS winner will be, based on which company gets the most deals and whether their markets go sour at all.

The smaller companies are coming off a numerically smaller growth base, while MBL is building more international scale to take advantage of bigger deals to boost its EPS. MBL should have the ability to do even more of what its smaller rival BNB is doing:
BNB announced its latest earnings upgrade on Friday, after clinching its sizeable eircom takeover and socking away the related fees from the transaction.

BNB has started making noises about Australian investors not supporting its infrastructure fund (BBI), and that it will be setting up more international specialist funds and conducting its own capital raising. Does the strategy sound familiar? MBL has got a head start on the types of big international deals needed to boost EPS growth meaningfully. MBL itself has good scope to grow internationally, to reach the heights of the very large overseas investment banking firms.

MBL is a more mature operation, and should provide a bit more 'safety' when markets turn down. BNB, for instance, is proving more volatile, causing the sharper paring back of its price gains whenever the market adjusts. When the investment banking markets eventually become less friendly to growth, this will challenge the ability of the smaller, less well-established players to produce strong EPS growth.

Yeah saw the BNB upgrade

26 May 2006

Babcock & Brown Upgrade to 2006 EPS Growth Outlook

International investment and advisory firm Babcock & Brown (ASX: BNB) today announced that the 2006 interim result, to be released to the market on 24 August, is expected to report EPS growth in the order of 40%. Assuming interest in the investment opportunities presented by our specialised funds and asset management platform continues and there are no major market disruptions, we expect the strong momentum in the business at the present time to flow through to EPS growth of at least 35% for the full year. This revised full year guidance reflects an increase on the 20% EPS growth previously announced.

MBL is already too big (base is already too big) NPAT of about $900 Mil, BNB NPAT of about $180 mil. So an increase of 100 mil per annum to both is more favourable to BNB % wise?

Both have great potential imo.

thx

MS

 

[bug]

Re: MBL - Macquarie Bank

BNB seems to have the jump on MBL at the moment in any event. Since reaching its all time high of $78 on 30 September 2005, MBL has been up and down a lot in the $60's range. It wasn't helped by providing guidance its full year profit would just be 'slightly up', and the +13% result was announced during a trading halt!

While MBL has been on the backfoot, BNB has been issuing upgrades and creating higher EPS expectations! It's up to MBL to prove its international expansion strategy can accelerate it to the next level.

 

[michael_selway]

Re: MBL - Macquarie Bank

BNB seems to have the jump on MBL at the moment in any event. Since reaching its all time high of $78 on 30 September 2005, MBL has been up and down a lot in the $60's range. It wasn't helped by providing guidance its full year profit would just be 'slightly up', and the +13% result was announced during a trading halt!

While MBL has been on the backfoot, BNB has been issuing upgrades and creating higher EPS expectations! It's up to MBL to prove its international expansion strategy can accelerate it to the next level.

Updated forecasts

BNB - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 77.0 105.3 127.9 152.2
DPS 23.0 32.0 41.2 47.8

was before

BNB - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 77.0 95.0 116.1 138.2
DPS 23.0 29.1 36.5 43.7

whos next to upgrade (or downgrade)?

thx

MS

 

[bug]

Re: MBL - Macquarie Bank

BNB's PER is 24 vs MBL's 16. That's a pretty big gap.

The conventional wisdom was that both companies would have similar PERs, as BNB's increased growth prospects would be offset by its greater balance sheet risk.

Yes, BNB is growing its EPS, but this isn't keeping at up all with the shares' excessive valuation. BNB is overvalued, and the hype around it leaves it vulnerable to bad markets and bad news. It got knocked around just recently by the last correction, before saving itself with an earnings upgrade. In October last year, an independent report came out saying it was overvalued and only worth about $7, which knocked it down to $15 amid the broader market correction.

It's obvious the stock has its supporters, but they are paying for a slice of
something that is not yet there. BNB's EPS growth is commendable, providing everything works on a best case scenario for it.

Part of the gap in PER's also seems to be due to MBL lagging below its average historical PER. MBL looks to be a sleeper, though, because 2007 is already off to a good start. The big Dyno Nobel deal just missed the 2006 year, so it's a 'freebie' for 2007 earnings!!!

 

[michael_selway]

Re: MBL - Macquarie Bank

BNB's PER is 24 vs MBL's 16. That's a pretty big gap.

The conventional wisdom was that both companies would have similar PERs, as BNB's increased growth prospects would be offset by its greater balance sheet risk.

You also need to look at Forward PE, as recently BNB had a profit upgrade

Date: 9/6/2006
Author: Robert Clow
Source: The Australian --- Page: 26

The share price of Australian financial companies fell on 8 June 2006 while a merger sustained Record Investments. Macquarie Bank and Babcock & Brown have some dependence on a strong stock market to resell their assets. This caused Macquarie's share price to fall by $A2.80 to $A62.80, while Babcock's dropped by $A0.42 to $A19.89 in the weaker overall market. On 9 June, the shareholders of Record Investments will vote on its $A3 billion merger with Allco Finance. Allco is more dependent on global economic growth. Record's share price rose by $A0.03 to $A10.73

 

[bug]

Re: MBL - Macquarie Bank

Huntley's is currently quoting PEs of 22 (BNB) versus 16.72 (MBL), taking forward earnings into account. The gap stands (but a bit less!)

(Huntley's uses both forecast and historical EPS to give a more balanced P/E ratio than using either one alone. The current price is divided by the average of the last actual earnings per share figure and the projected EPS figure for the next year. The two figures are weighted based on the elapsed time between each period). Using outright Forward PE's still gives a good gap
between MBL and BNB.

MBL's global deal flow is starting to ramp up again bringing improving sentiment - It is head to head with Goldman Sachs with a $6.5B bid for Associated British Ports, will pick up more of Bristol and Sydney Airports as part of the successful Ferrovial takeover of BAA, and made a $570M purchase of the leading US, Canada and UK air pressure vending operator. Today's Australian Financial Review reports Macquarie topped the Mergers and Acquisitions league table. Macquarie is going from strength to strength. It is smaller in global terms against the giants, but can still give the likes of Goldman Sachs and UBS a run for their money. It is the largest non-government owner of infrastructure in the world, but has massive future growth potential on the world stage. The size of the company in the Australian context, or comparisons to BNB and others, are not a fair representation of its major global growth prospects. Macquarie's day has just begun.

 

[michael_selway]

Re: MBL - Macquarie Bank

Huntley's is currently quoting PEs of 22 (BNB) versus 16.72 (MBL), taking forward earnings into account. The gap stands (but a bit less!)
QUOTE]

Thats only fwd 2006 EPS, u need to look at aleast 3 yrs forward EPS, maybe more.

MBL - Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 382.3 440.2 471.2 473.5
DPS 215.0 250.0 267.5 281.0

EPS(c) PE Growth
Year Ending 30-03-07 440.2 15.0 15.1%
Year Ending 30-03-08 471.2 14.0 7.0%

BNB - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 77.0 105.3 127.9 152.2
DPS 23.0 32.0 39.1 47.9

EPS(c) PE Growth
Year Ending 30-12-06 105.3 18.8 36.8%
Year Ending 30-12-07 127.9 15.5 21.5%

So

MBL 2009 Fwd PE = 66/4.735 = 13.94
BNB 2008 Fwd PE = 19.81/1.522 = 13.02

So BNB appears cheaper as time goes by, but what about 2010 2011 EPS? It appears MBL is "slowing" % wise in growth pa as currently forecasted? Also BNB recently had an EPS upgrade from 20%pa to now 36.8% this yr, so there may be more suprises to come in the future? What about MBL?

thx

MS

 

[Chief Wigam]

Re: MBL - Macquarie Bank

Good commentary and thanks for the info.

I am hoping to hear what people think of Macquarie's investment companies such as MCQ and MCG? MCQ has done poorly since it floated. Do they generally come back with time? They claim to offer capital growth but there's certainly been none with MCQ. :dunno:

 

[scsl]

Re: MBL - Macquarie Bank

I've held MCQ since the IPO in April 2005 and having recently paid for the second instalment, am disappointed with its performance and have been thinking of selling but am just not sure as CW said of whether they can "come back with time"...

MCQ have made significant acquisitions such as the European Directories business and Red Bee Media but its share price is down 15.2% from April 2005. Its investments are in sectors with "strong growth potential and high barriers to entry" but it has failed to find serious buyers. Is it because of a lack of positive analyst coverage/institutional buyers?

Even an announcement on Friday that an MCQ led consortium had acqured the world's largest owner and operator of vehicle tyre inflation equipment in ASI Holding Corp failed to excite the market, with its shares up just 0.30%. What is going on??

With this acquisition, MCQ has now fully invested the proceeds from the IPO. Will this somehow affect its trading pattern or will the market wait for its annual results?

I read that Macquarie offshoots could be performing better if MBL weren't reaping all those continual performance/management fees and feel as though it would be wiser in the long run to switch over to MBL shares. Any thoughts?

Cheers

 

[Sean K]

Re: MBL - Macquarie Bank

I agree with the management/performance fee issue. The millionsairre's club, soon to probably be billionairre's club are might be seen to be milking it for a little bit more than they should. Although, I'm not too sure how much is 'management' and how much is 'performance'. Perhaps they need to lift the performance part and they might try harder to get more value out of them!

In general though, I think managed investments like MAP, MIG etc have performed ordinary in the past year because everyone is jumping on commodities for the 'growth' cycle. Airports and tollroads just aren't very sexy and aren't going to announce a new massive discovery or farm in by RIO.

 

[BlueTrader]

Re: MBL - Macquarie Bank

I agree that the commodities cycle may be drawing attention from industrial stocks. Also, Macquarie's and Babcock's infrastructure fund share prices have been lagging given the global interest rate scares. The leveraging used within the infrastructure funds would be disadvantaged by higher interest rates and inflation, but offsetting factors include toll road revenue increasing with CPI and the long period leveraging occurs over. Maquarie and BNB have a lot of fingers in a lot of pies, which gives them plenty of room to move. I would expect Macquarie will bring out a ports infrastructure fund if they successfully bid for Associated British Ports, given they already have the Isle of Man Steam Packet Company and Chinese ports.

Comparing MBL and BNB's EPS and PE's is a bit tricky, because a lot of their success really depends upon the deals they can each land. I find using forward/'blue sky' PEs over longer periods produces unclear results in the case of investment banking shares like MBL and BNB. Markets go sour and earnings don't eventuate in the event of a major downturn. These cyclical companies depend upon buoyant equity markets to produce their earnings, which forward PEs cannot predict will continue.

 

[scsl]

Re: MBL - Macquarie Bank

one of the longest lists i've ever seen. i'll give you a clue... MBL's assets.

http://www.crikey.com.au/articles/2006/05/16-1152-1641.html

also, stephen mayne, founder of ezine Crickey, is running for the MBL board. why? so he can stop the things that he sets out in the article below from ocurring again, which can be seen as a form of insider trading.

http://www.crikey.com.au/articles/2006/06/30-1533-9058.html

cheers,
scsl

 

[blinkau]

Re: MBL - Macquarie Bank

What does everyone think of MBL at the moment? Im deciding if I should pickup some (for the share game) but is interest rates going to have a negative effect on them?

 

[bug]

Re: MBL - Macquarie Bank

Over the last ten months, MBL has been up and down a few times between $60 and $70. It's at the lower end of this range yet again and presents historically favourable value. It's price earnings ratio is a historically low 15 and it's expected to break the $1 Billion mark for the first time in its full year result (year ended March 2007). A fully franked dividend of 3.8% has appeal.

MBL has a good international growth story happening beyond its disappointing short term price movements. For a buyer the chance to get MBL close to $60 is just a good opportunity.

Interest rate rises generally hurt the share market, including financial stocks. MBL, like other financial stocks feels an effect because rising rates usually crimp the liquidity of the markets they do business in. However, financial institutions can also improve their margins through higher interest rates.

-------------------
Doing your own research is recommended when deciding whether to buy or sell individual shares.

 

[pacer]

Re: MBL - Macquarie Bank

Got in cheap this morning....wadda y recon?....all red otherwise.......3000cfd 1 week max

 

[Sean K]

Re: MBL - Macquarie Bank

7 brokers I follow have it as buy/outperform with an average $84 target. Wavering between $60 and $70, so every chance it'll be back at $70 some time soon for a quick few bucks. MACD just positively crossed so on the way up. For the moment.