Welcome to this ASX World Cup semi-final game between Macquarie Group Ltd (ASX: MQG) and Computershare Limited (ASX: CPU). This is an interesting match up between two teams in the capital markets game with global reach but different styles.
Pre-match commentary and stats
Computershare supporters will point to its recurring revenues, fat margins, and reliable revenue streams. Macquarie's fans will point to its clever tactics, desire to win and recent good performance partly delivered by its improving capital markets teams.
| Macquarie | Computershare | |
| Code | ASX:MQG | ASX:CPU |
| Recent Price | $59.18 | $12.56 |
| Market Capitalisation | $19.03 billion | $6.99 billion |
| Dividend Yield / Franking | 4.6% | 40% | 2.3% | 20% |
| P/E ratio | 15.7 | 19.5 |
| Price-Book ratio | 1.67 | 5.79 |
Source: Morningstar / Thomson Consensus Estimates.
The match kicks off with Macquarie's capital-markets facing businesses immediately going on the attack. The Macquarie Securities and Macquarie Capital players really pulled their socks up in the past year, supported as they were by more IPOs, mergers and acquisitions, and advisory activity. With a reasonable outlook for more capital markets deal activity all around the world into 2015, the prospect of a continued resurgence for these two key earners sees Macquarie score an early goal! 1-0 to Macquarie.
Computershare just loves buoyant capital markets as well and the huge volumes of data it manages on behalf of clients give it a competitive advantage. This is because those clients are highly unlikely to walk away given the depth-of-service Computershare provides as a share registrar. Computershare's generally more reliable revenue streams see it score for the defensive fans to make it 1-1 at half time.
Going into the second half and the Macquarie team seems to be ahead on value and yield with a price-earnings of 15.7 compared to Computershare's 19.5. The market perhaps sees Macquarie as a riskier proposition given its heavier leverage to the volatility of capital markets. However, Macquarie is also looking to expand into the profitable Australian home-loan market and other more traditional banking services to retail clients. Macquarie's mortgage portfolio currently only represents 1% of the Australian market, so it has plenty of scope to take market share from the big players like Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC). Computershare's defense is a strong one, but in the end Macquarie's outlook proves too strong on current valuations. It's a riskier play, but Nicholas Moore the team captain is able to draw on six years' experience as chief executive to volley a fine winner and make it 2-1. There's no doubt Computershare is a strong team, but Macquarie Bank is in the World Cup Final!
If you're looking for some lesser known teams to score goals for your portfolio, we've got a hat-trick below.
