Magellan shares surge to record high after it posts profit, dividend surge

Magellan shares surged to a record high in midday trade after it booked a huge jump in profit and hiked its dividend.

Magellan chairman and CIO Hamish Douglass. Hollie Adams/The Australian

Magellan Financial Group shares surged to a record high after a strong investment performance and funds growth in the December half year underpinned a huge jump in its profit and dividend.

The global fund manager (MFG) today reported an adjusted net profit after tax of $176.3 million for the six-months to December 31, up 62 per cent on the previous corresponding period a year ago.

It will pay an interim dividend of 73.8 cents per share, an increase of 66 per cent from a year earlier, which means, as Margin Call notes, co-founders Hamish Douglass and Chris Mackay will collect almost $36m and $30.5m of dividends respectively over the past two halves.

Funds under management grew by 35 per cent to $72.1 billion, leading to a 28pc rise in its management and services fee revenue to $228.1m.

“Magellan has had a successful first half that has been underpinned by strong investment performance in volatile market conditions,” CEO Brett Cairns said.

“We continue to focus on our clients and delivering on our investment objectives which ultimately leads to strong financial outcomes for our shareholders.”

Magellan’s flagship Magellan Global fund earned 11.5 per cent before fees last year and was ranked number two in the Mercer Investment Surveys.

Macquarie Equities said Magellan’s adjusted profit was 5 per cent above its expectation.

“Magellan continues to deliver strong results and recent performance metrics should continue to support flow momentum in the near term, justifying a premium valuation to peers,” said Macquarie’s Brendan Carrig.

In its January update on funds under management, Magellan said FUM rose 3 per cent to $72.95bn, with retail net inflows of $110m and institutional net inflows of $207m.

“Despite volatile markets, Magellan’s funds’ strong performance we believe will continue to yield positive net flows,” said CLSA analyst Ed Henning.

At 12.46pm (AEDT), shares in Magellan were up $2.60 or 8.9 per cent at $31.80 after rising more than 10 per cent to a record high of $32.27 in early afternoon trading.