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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Macquarie Group Limited    MQG   AU000000MQG1

MACQUARIE GROUP LIMITED

(MQG)
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End-of-day quote. End-of-day quote Australian Stock Exchange - 12/04
141.82 AUD   +2.32%
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Australia's big IPOs split investors between tech growth seam and coal-powered dividends

10/27/2020 | 11:36pm EST
FILE PHOTO: The logo of software company Nuix, set for an IPO later this year, can be seen in an office in central Sydney

SYDNEY (Reuters) - Australia's two biggest share listings this year will highlight a polarised investment landscape: the strong, expanding allure of high-growth technology, versus entrenched demand for coal-linked assets that offer a steady stream of high dividends.

Canada's Brookfield Asset Management will early next month offer investors a coal terminal in Queensland that, according to Credit Suisse analysts, could be valued at up to A$3.5 billion ($2.5 billion). The deal promises a dividend yield of more than 5.5% and will likely be Australia's biggest initial public offering (IPO) in about two years.

Soon after, Macquarie Group plans to target the opposite end of the investment spectrum with a stake in a technology firm that offers the potential for capital gains.

At first glance Macquarie's Nuix, which sells software to analyse unstructured data and is valued at about A$2 billion, looks to be the pick of the two: in the past two years it has boosted sales at average compound rates of over 15%.

But even as concerns about carbon dioxide emissions and climate change exert growing influence on investment decisions, healthy demand is expected for Brookfield's Dalrymple Bay Coal Terminal (DBCT), with the dividend a particular lure for retail investors.

"The world has become quite barbelled," said Jun Bei Lui, portfolio manager at Tribeca Investment Partners, referring to the bifurcation in investment landscapes. "Everybody is paying for growth and yet there's no dividends around, so I think (the DBCT dividend) will appeal to the other end."

"But the investment base for anything that have environmental, social and corporate governance (ESG) issues has been shrinking." She said Tribeca assessed all IPOs but declined to say whether it would buy into either.

DBCT exports mostly metallurgical coal, an essential but carbon-intensive ingredient in steelmaking. Steel companies are testing processes to replace metallurgical coal with green hydrogen, but no such alternative exists currently.

It will change its name to Dalrymple Bay Infrastructure for the listing, according to a Credit Suisse note, as the company seeks to position itself as an infrastructure play, disassociating its brand from coal.

DCBT has declined to comment on matters relating to the IPO.

DEEP FREEZE ENDS

Like many aspects of the global economy, Australia's IPO market ground to a halt due to the coronavirus crisis, but a surge of tech IPOs globally has helped kickstart listings of domestic small and mid-sized e-commerce and tech-related firms.

Australia's equity market has jumped 38% from a COVID-induced trough in March, fuelled by central bank liquidity and near-zero interest rates, and led by technology stocks such as payments operator Afterpay, which has surged more than elevenfold.

This bodes well for Nuix. If market volatility subsides, it could attract enough investors to pay multiples between 10 and 15 times its revenue, the level fetched by bigger American rival Palantir Technologies which listed this month despite not returning a profit in 17 years.

"Since the COVID correction, some of the more speculative sectors in Australia are doing best, that's where the hot money has been, but there's also demand for long-term income streams," said Anton Tagliaferro, investment director at Investors Mutual Ltd.

Asked if he planned to buy DBCT shares, Tagliaferro said he believed met coal will continue to be used around the world for many years, "so we think something like DBCT could still be a suitable investment".

(Reporting by Paulina Duran in Sydney; Editing by Kenneth Maxwell)

By Paulina Duran


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AFTERPAY LIMITED -1.77% 94.5 End-of-day quote.222.75%
BROOKFIELD ASSET MANAGEMENT INC. 2.47% 54.36 Delayed Quote.6.06%
CREDIT SUISSE GROUP AG 1.33% 11.815 Delayed Quote.-9.84%
MACQUARIE GROUP LIMITED 2.32% 141.82 End-of-day quote.2.88%
PALANTIR TECHNOLOGIES INC. -0.75% 23.85 Delayed Quote.0.00%
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Financials
Sales 2021 11 098 M 8 235 M 8 235 M
Net income 2021 2 215 M 1 643 M 1 643 M
Net Debt 2021 53 524 M 39 720 M 39 720 M
P/E ratio 2021 23,7x
Yield 2021 2,47%
Capitalization 49 034 M 36 451 M 36 388 M
EV / Sales 2021 9,24x
EV / Sales 2022 9,21x
Nbr of Employees 16 356
Free-Float 91,2%
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Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 141,67 AUD
Last Close Price 141,82 AUD
Spread / Highest target 8,11%
Spread / Average Target -0,11%
Spread / Lowest Target -11,9%
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Managers
NameTitle
Shemara Wikramanayake Chief Executive Officer, MD & Executive Director
Peter Hastings Warne Independent Chairman
Nicole Sorbara COO & Head-Corporate Operations Group
Alex H. Harvey CFO & Head-Financial Management Group
Diane Jennifer Grady Independent Non-Executive Director
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