By Imran Valibhoy, Equities Analyst at wise-owl.com, an Australian investment research house.
Tuesday 30th January 2007 |
Text too small? |
It
is not often we come across an emerging investment bank which has the potential
to become a leading player in the finance industry. However, MFS Limited (MFS)
is showing all the characteristics of becoming one of these.
MFS is a diversified investment company in the funds management and financial
services sector. The company owns the MFS Funds Management Group, the HFA Funds
Management Group and a range of domestic tourism related assets including the
Mount Hotham ski resort, the Falls Creek ski resort and Saville Hotel Group.
It has been a busy year for MFS with numerous takeovers which have seen the
company divesting their asset base further. The amount of fee paying assets
under management is currently standing at $3.87 billion.
Assets under management is expected to grow to $5 billion this financial year
with numerous takeovers planned. The largest target is S8 Limited (SEL) for
around $700 million.
With the acquisition of Saville Hotel Group, MFS is now the second largest accommodation
management group in Australia and will further benefit from the integration
of S8 Limited.
MFS have also purchased the Northplan financial advisory firm which has NZ$670m
funds under management and advice. The company also recently struck up an agreement
with Sunland Group with regards to their Sunkids and Sunleisure operations.
On the property front, MFS have taken a 30% stake in Gersh Investment Partners
Ltd.
The more assets MFS have under management, the more fees they are able to extract
which increases revenue. We expect assets under management and the number of
investors to increase which should see revenue increase even further.
MFS reported revenue of $327.7m to the 30th June 3006 which was up 131% from
2005’s revenue of $141.2m. The company is due to release its eagerly anticipated
half year results on Thursday, February 15th which should set the tone for the
rest of the year.
Going forward, MFS are looking to diversify even further with growth streams
such as environmental infrastructure and overseas investments. They are also
looking to increase their presence in the Sydney and Melbourne markets as well
as New Zealand.
The current acquisitions should guarantee further impressive growth in revenues
which should lead the market to a re-rating of the stock which is currently
trading at cheap multiples relative to its peers.
Wise-owl.com currently has a buy recommendation on MFS Limited
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