Earnings Wrap: Magellan shares surge on Opex beat, Spark New Zealand delivers to guidance

Magellan: Profits halve but a massive Opex beat

Magellan (ASX: MFG) adjusted net profits fell 57% to $174.3 million, in-line with the $174.1 million expected by analysts.

• Average funds under management down 48% to $48.8bn

• Adjusted EPS down 56% to 95.5 cents per share

• Interim and final dividend down 52%$ to 86.7 cents per share

• FY23 operating expenses of $121.3 million, below its FY23 guidance and well-below Goldman Sachs expectations of $129.7 million

• FY24 opex guidance of $95-100 million, below Goldman Sachs forecasts of $128.4 million

A reversion of its leadership structure was announced alongside the financial results, “business as usual” resuming with Gerald Stack, reappointed as CIO after being named Deputy CIO last October – at which point David George was both CEO and CIO.

Magellan CEO and managing director David George emphasised these results mark only the first year of the firm’s five-year strategy.

“Our primary focus has been on delivering the investment performance we are known for and we are encouraged that the changes we have made during the year have resulted in improved collaboration, information flow and efficiency,” he said.

George called out the “performance improvement” of its Global Equities Strategy which beat its benchmark in 2H2023, drawing in $11 million in performance fees.

“We have now unwound the CEO/CIO structure that was previously announced and reverted to “business as usual” with Gerald Stack resuming his former role as head of investments,” he said.

Spark New Zealand: Earnings jump on divestment

Spark New Zealand (ASX: SPK) reported growth across the board thanks to one-off proceeds from its strategic divestment of a majority stake in its TowerCo business. The overall result was largely in-line with analyst expectations. (All figures in NZ dollars)

• Revenue rose 20.7% to $4.49bn

• EBITDAI jumped 49.7% to $1.72bn

• Adjusted EBITDAI up 3.7% to $1.19bn, in-line with the $1.18bn expected by analysts

• Net profit up 176.8% to $1.13bn

Outlook:

• “As we look to FY24, we have confidence in Spark’s ability to continue to grow earnings and free cash flow and are guiding to a higher total FY24 dividend of 27.5 cents per share, 100% imputed.”

• FY24 EBITDAI guidance of $1.2bn to $1.26bn

Abacus Property: Solid earnings despite valuation declines

Abacus Property (ASX: ABG), a diversified property group with interests in the storage, office and retail segments reported a 95% fall in statutory net profit of $25.5 million in FY23 due to property valuation declines.

• Funds from operations of $175 million is up 8.8%

• Management attributed to the group’s core commercial and self-storage sectors

• Revenue of $359 million was up 13%

• EBIT of $210 million ex-items is down 11%

The commercial portfolio, which held 21 assets as of 30 June 2023, delivered 13% growth in net property rental income contribution, lifting FFO to $114.9 million.

The Group’s 1313-asset self storage portfolio delivered 19% growth in net property rental income to FFO of $147.5 million, when compared to FY22.

The self-storage division’s result was attributed collectively to population growth, housing density and the rise of e-commerce.

“This positive result reflects the resilience in our occupancy and income growth levels, which were supported by our diversified lease profile with an Office WALE (weighted average lease expiry) of 3.7 years, and our portfolio of majority A grade Office buildings,” management said.

The board announced a distribution per security of 18.4 cents, up 2.2% on FY22, in line with its distribution payout ratio of 94% of FFO.