Tag: ASX:MQG

During a thin, pre-holiday trading session on Friday, all the major banking names bounced off their intra-day lows.

Into the close of ASX trade, our ALGO engine triggered a sell signal in MQG at $90.90.

MQG peaked on May 8th at $96.30; the day before the government announced the banking levy. Subsequently, the shares dipped to $82.30 on September 8th.

With all the local banking names facing headwinds in core revenue growth going forward, we consider the rebound in MQG shares as corrective in nature.

As the chart below illustrates, a trade back to the June 20th high of $91.45 would signal a “double top” and likely be met with selling interest.

With internal momentum indicators showing an “overbought” condition, we see scope for MQG shares to retest the $83.00 level over the medium-term.

Macquarie Group

Our Algo Engine triggered a buy signal in MQG near the recent low of $82.28.

During an outlook update provided to the market, MQG re-affirmed guidance for its FY18 result to be broadly in line with FY17.  Management noted that, strong revenues in the FUM business will help underpin FY18 earnings.

FY18 cash earnings of $2.3b, EPS $6.70 and DPS $4.70, represents 3 – 5% earnings growth on FY17 and places the stock on a forward yield of 5.4%.

There appears to be short-term upside price momentum from the recent signal, however, stop losses below the $82.28 low are advised.

The ALGO engine triggered a buy signal on MQG at yesterday’s ASX close at $83.01.

The stock has dropped over 7% since posting an intra-day high at $89.35 on August 17th.

This swift decline has pushed internal momentum indicators into an “oversold” area, which the technical ALGO engine picked up on when creating the buy signal.

We remain cautious of the forward earnings potential in the local banking sector and will monitor this trade over the next few trading sessions.

At this point, we would consider any move in MQG up into the $84.90 area as a corrective reversion and an area to sell long holdings or establish short positions.

Macquarie Group

Shares of MQG lost over 2% for the week as internal momentum indicators are now rolling over into negative territory.

In addition to the negative technical picture, MQG faces a major class action suit over allegations some of its investment advisers artificially inflated the price of a small mining company before a sudden collapse wiped out many of its investors.

According to an article in the Sydney Morning Herald, the investment bank’s brokers are accused of deliberately “ramping” stock in Cleveland Mining Group: a Brazilian iron-ore mine project with a potential value of $34 billion that turned out to be a “worthless patch of jungle.”

Initial price support can be found at the June 8th low of $86.05. A break of that level could see downside range extension to the February 9th low of $82.30.

Macquarie Group (MQG)

FY17 revenues were broadly flat on last year at $10.6b. Operating costs were down slightly which helped to produce an approximate 7% uplift in net profit to $2.2b.

FY17 EPS $6.58 and a very solid final dividend of $2.80 takes the payout ratio to 72% and now places the  stock on a 5.5% yield into FY18.

With the stock is up 50%  during the last 12 months and now trading on 15x forward earnings, further upside is likely to be limited. Flat revenue will continue to place pressure on management to drive down operating costs.

FY18 forecast revenue $10.5b. net earnings $2.2b, EPS $6.50 & DPS $4.90.