MA Financial trims guidance on delayed revenue, shares fall

The revenue update comes following a challenging period for MA’s shareholders, with the value of the company’s stock plunging 50 per cent over 12 months.

MA Financial has downgraded its earnings guidance for the year. Picture: NCA Newswire / Gaye Gerard

MA Financial has trimmed its earnings guidance on delayed corporate advisory revenue but set a bullish tone for the momentum in the business, with gross fund inflows picking up in the second half.

The financial services group – previously Moelis Australia – on Thursday said it expected underlying earnings per share to come in at between 38c and 38.5c this financial year, up by between 28 and 30 per cent on the prior year.

This compares with its previous guidance of between 30 per cent and 40 per cent growth, with MA citing the timing of multiple corporate advisory transactions as the reason for the downgrade.

“Fiscal 2022 earnings per share has been impacted by completion timing of multiple corporate advisory transactions that have been largely completed in FY22 but are expected to close in the first quarter of 2023,” the company told the market. “Also, reflecting market volatility in the fourth quarter, revenue per advisory executive is expected to be approximately $1m in FY22, slightly below its target range of $1.1m-1.3m per executive.”

The delayed transactions represent around $5m in revenue, or EPS of 1.1c. Shares fell 11 per cent on Wednesday to close at $4.42.

Despite the earnings downgrade, MA joint chief executive Julian Biggins said there had been strength in the business through a challenging year. “While the timing of corporate advisory revenue is always subject to transaction variability, to grow EPS by approximately 30 per cent in such a challenging economic environment demonstrates the strength and diversity of our business,” he said.

MA also detailed improved gross flows through the year, with some $1.5bn in new funds under management raised, and with inflows accelerating in the second half of the financial year, driven by investor interest in the group’s credit investing strategies.

Gross inflows into the group’s managed funds in the latter six months of the year tipped over $960m, up 37 per cent on the prior corresponding period, according to the update. This compares with the $574m that was poured into the funds in the first half.

Total assets under management, meanwhile, stood at $7.8bn at the end of December, up 13 per cent on the prior corresponding period and a lift of $600m from the first half. The update comes after a challenging period for MA, with shares down 50 per cent over 2022.

One of the biggest drops in the share price occurred in September, with a 20 per cent plunge in a single day after the government flagged it could axe the Significant Investor Visa scheme this year. MA has been at the forefront of that scheme, with wealthy foreign investors a major source of funds.