Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record gross and net inflows, supported by a rapidly expanding domestic distribution channel.
- Significant growth in both Finsure and MA Money, with MA Money's net interest margin expanding.
- Launch of two significant institutional initiatives: a real estate credit vehicle with Warburg Pincus and a strategic partnership with Flexicommercial.
- Assets under management increased by 13% to $9.7 billion, and gross fund flows up 16% to $1.1 billion.
- Corporate Advisory revenue increased by 12% to $22 million, indicating strong performance in a cautious market.
Negative Points
- Underlying earnings per share decreased by 27%, largely due to strategic investment and interest rate environment impacts.
- Expenses increased by 16%, with strategic investment spend contributing significantly to this rise.
- Investment spend in the first half provided an earnings headwind to group EBITDA of $8.6 million.
- Recurring revenue margin declined to 150 basis points due to market conditions and temporary fee waivers.
- Net flows were impacted by redemptions from a small number of large investors and processing delays.
Q & A Highlights
Q: Can you provide more details on the partnership with Warburg Pincus and the expected mix of investors in the new real estate credit vehicle?
A: The real estate credit vehicle will be launched globally, targeting institutional investors in regions like the Middle East, Asia, and North America. Warburg Pincus will market to their funds, and we are confident about reaching the $700 million target by Christmas. The vehicle will be managed by us, and the deployment of funds could take 12 to 24 months. This partnership allows us to build on our relationship with Warburg Pincus and pitch other ideas to them and other institutions.
Q: What are the expected milestones for the US private credit platform over the next year?
A: We are currently finalizing our fund structuring and expect to see capital deployment and growth in the first quarter of next year. The process has taken some time, but we anticipate more activity starting early next year.
Q: What are the key factors driving the expected earnings uplift from the first half to the second half of FY24?
A: The main factors include a 10 basis point increase in asset management margins, reduced investment spend, MA Money reaching breakeven, and strong underlying net flows in asset management. Additionally, there is a skew in corporate advisory earnings.
Q: Will there be any strategic investment spend in FY25 similar to FY24?
A: While strategic investment will always be a part of our growth strategy, the spend in FY25 will likely be significantly less than in FY24. We will update the market later in the year as we finalize our budgeting.
Q: Can you explain the trends in asset management flows and the impact on AUM in the second quarter?
A: Net flows moderated slightly in the second quarter, but AUM growth was impacted by the sale of assets in the hospitality business and some minor mark-to-market adjustments. These factors caused a headwind in AUM growth.
Q: What are the expectations for recurring revenue margins in the second half of FY24?
A: We expect recurring revenue margins to improve to approximately 160 basis points in the second half. This improvement is driven by the AUM mix and the timing of fee income from our credit funds.
Q: How should we think about net interest margins (NIM) for MA Money in the second half and into next year?
A: The current NIM for MA Money is around 1.1%, and we expect a slight increase by the end of the year. We aim for a NIM in the range of 1.2% to 1.4% as market conditions normalize.
Q: What is the target NIM for MA Money by FY26?
A: The target NIM for MA Money by FY26 is in the range of 1.2% to 1.4%, which aligns with our profitability goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
