ASX growth shares have made something of a comeback in the past couple of months.

But many experts are still warning investors to buy those companies with solid numbers behind them rather than speculative pre-revenue businesses. 

With this in mind, here are a couple of ASX shares that Cyan Investment Management holds that are growing spectacularly:

Melbourne games studio keeps churning out the hits

Cyan has been a longtime fan of electronic games developer Playside Studios Ltd (ASX: PLY).

After seeing the share price freefall 60% from February to June, the fund was pleased to finally see the unaudited full-year results last month.

“In FY22, Playside grew revenues 169% to $29 million, expanded its team considerably and has a spate of exciting game releases and milestones across FY23,” said the Cyan portfolio managers in a memo to clients this week.

“And, importantly, has a very strong balance sheet backed by almost $38 million in net cash.”

The ASX tech share has risen a stunning 54% since the June trough. But even after that, cash forms 33% of its market capitalisation.

“The business continues to expand with a newly formed publishing division announced in late July.”

While the Melbourne company is not widely covered, both analysts surveyed on CMC Markets currently recommend Playside shares as a strong buy.

Cashing in on big-name clients jumping on a structural trend

Marketing technology provider XPON Technologies Group Ltd (ASX: XPN) is not exactly a household name yet.

But Cyan portfolio managers Dean Fergie and Graeme Carson are confident that it is serving in a space exactly where the business world is heading.

“We see this marketing technology business as a great way to gain exposure to the structural shift towards a requirement for businesses to build first-party (company-owned) data for digital marketing,” read their memo.

“The material move away from personal privacy threats such as website tracking 3rd party cookies continues to accelerate as Microsoft Corporation, Google and Apple Inc — along with independent providers like Brave, Firefox and Opera — tighten their browser security systems.”

Similar to Playside, Xpon shares halved in value this year until its June trough. Last month, Cyan welcomed its fourth-quarter financials.

“The most recent quarterly cash flow statement confirmed our confidence showing revenue growth of 134% year-on-year.”

The Xpon share price has rocketed 55% since June.

The company only listed in December, which was, in retrospect, terrible timing for a high-growth tech stock.

The Cyan team reckons it can only look upwards and onwards from here, armed with a stable of big-name clients.

“Xpon already delivers ARR [annualised recurring revenue] of $16 million (+78% YoY) and expects significant organic growth going forward,” read the memo.

“A relative newcomer to the ASX, we expect it to garner [the] attention of investors as revenue builds and new clients are signed up, adding to existing enterprise clients such as Domino’s Pizza Enterprises Ltd (ASX: DMP), Flight Centre Travel Group Ltd (ASX: FLT) and Super Retail Group Ltd (ASX: SUL).”

The post Revenue up 169%: 2 ASX tech shares showing explosive growth appeared first on The Motley Fool Australia.

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• ‘Great long-term investment’: Expert names small-cap ASX share to buy for cheap

Motley Fool contributor Tony Yoo has positions in Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Super Retail Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Apple, Dominos Pizza Enterprises Limited, and Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part three of this edition, we’re joined by Grant Nichols, fund manager of the $2.4 billion Centuria Office REIT (ASX: COF), Australia’s largest listed pure-play office real estate investment trust (REIT). Today, Nichols discusses the threats and opportunities ahead for Australia’s commercial office sector.

The Motley Fool: Earlier, we discussed how tenants’ flight to quality has helped your leasing success. Noting that most of your REIT’s office space is outside of city centre locations, what impact has that had?

Grant Nichols: Yes, COF doesn’t have a lot of CBD exposure in the eastern markets. In fact, we have no assets in either the Sydney or Melbourne CBDs.

It’s a bit of a contrast from what you hear, that people have this great desire to be located in CBDs. That’s not always the case.

There are a couple of things worth noting.

We’ve looked at the S&P/ASX 200 Index (ASX: XJO). And 53% of the ASX 200 corporations are headquartered either in metropolitan or regional office markets. It’s a big proportion of the Australian economic output that want to be located in markets we’re investing into.

The other key to investing in markets outside of the CBD is they generally can allow for a much more pleasant commute. People want to be close to home, and the public and private transport accessing their workplace won’t be as congested.

What’s interesting to note is that the most important aspect of employment workplace satisfaction is the commute. If you can address that, you have a distinct advantage from a tenant perspective for attracting and retaining employees.

MF: Do you have any regrets over the past year with the COF REIT?

GN: Like a lot of peers, everyone’s been somewhat shocked by the velocity of the interest rate change. It’s been a very dramatic shift from March to where we are now.

In retrospect, we would’ve tried to mitigate that interest rate risk more than we were able to. Ultimately, the velocity of change was quite unprecedented, so it’s been difficult to moderate and foresee.

MF: And what was your best call in the Aussie office market sector?

GN: Really, it’s the way we’ve been changing and creating the COF portfolio.

We listed on the ASX back in 2014. And during that period, from 2014 to 2022, we’ve dramatically improved the quality of the COF portfolio. And that has enabled us to complete the leasing that we have. Because of that flight to quality and experience that tenants are demanding, we’ve provided a much better product than we were able to eight years ago.

That’s enhanced our position and protected us from that volatility in tenant demand. Having a more desirable portfolio certainly aided us through the COVID period.

MF: What’s the biggest threat for investors in ASX office REITs in the year ahead?

GN: The biggest threat is if the RBA goes too hard with interest rate rises. If they go too hard and we incur an economic downturn, that’s going to have ramifications not only for business but the broader economy. Office markets are almost directly related to economic output and unemployment.

We certainly hope the RBA is fully informed on what their impacts are and they can engineer a soft landing.

MF: And what’s the biggest opportunity you see for ASX office REITs ahead?

GN: That relates to my earlier comment on how we position the COF portfolio. One of the things we’ve been doing across the portfolio is trying to improve the amenities we have within our office buildings.

At 818 Bourke Street, one of our assets in Melbourne, we’ve undertaken a lot of upgrades to amenities. We’ve done floor refurbishments, put in prayer rooms, provided more breakout spaces for teams to collaborate outside of their tenancy.

We also had a very large, underutilised rooftop on this building. So we utilised that to put in an outdoor exercise space, barbecue space, outdoor meeting space. Just creating an area where people can go outside of their workplace and utilise that space for their own personal downtime. Or for the tenant to utilise the space to improve their own collaboration within their business.

That’s something we’re looking at across our portfolio. I think the flight to quality and amenity is going to become more and more important. Particularly as employers are wanting to get their employees back to the workplace. If they can work with the landlord to facilitate an outcome that’s more appealing, I think we will continue to see opportunities across our portfolio.

**

If you missed the earlier installations of our three-part interview series with Grant Nichols, you can find part one here and part two here.

(You can find out more about the Centuria Office REIT (ASX: COF) here.)

The post Investing in ASX office REITs? Here’s what to look for in the year ahead: fund manager appeared first on The Motley Fool Australia.

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• How rising inflation can benefit ASX office REITs: fund manager
• This is the biggest issue for investors in ASX office REITs in 2022: fund manager
• Why did this $1.1 billion ASX 300 share just sink 9%?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking for dividend shares to buy now? If you are, then you might want to look at the shares listed below that have been tipped as buys.

Here’s why these ASX dividend shares are rated highly:

National Australia Bank Ltd (ASX: NAB)

The first ASX dividend share that could be a top option for income investors is banking giant NAB.

It has been rated as a buy by analysts at Goldman Sachs. The broker currently has a buy rating and $34.63 price target on the bank’s shares.

Goldman likes NAB because it sees “volume momentum over the next 12 months as favouring commercial volumes over housing volumes and NAB provides the best exposure to this thematic.”

In addition, it highlights that “NAB has delivered the highest levels of productivity over the last three years.” The broker thinks this “leaves it well positioned for an environment of elevated inflationary pressure.”

As for dividends, Goldman is forecasting a $1.50 per share dividend in FY 2022 and then a $1.70 per share dividend in FY 2023. Based on the current NAB share price of $31.32, this will mean fully franked yields of 4.8% and 5.4%, respectively.

Rio Tinto Limited (ASX: RIO)

Another ASX dividend share to look at is mining giant Rio Tinto.

Citi is a fan of the company and has a buy rating and $120.00 price target on its shares. It likes Rio Tinto due to its attractive valuation and strong free cash flow.

The broker highlights that its free cash flow is “still robust and RIO trades on CY23/24E EV/EBITDA of 3.4/3.7x.”

Citi is expecting this strong free cash flow generation to underpin fully franked dividends of approximately $8.32 per share in FY 2022 and $9.43 per share in FY 2023. Based on the current Rio Tinto share price of $96.74, this will mean yields of 8.6% and 9.7%, respectively.

The post These top ASX dividend shares have been tipped as buys by analysts appeared first on The Motley Fool Australia.

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• Why is the Rio Tinto share price lagging the ASX 200 on Tuesday?
• Here’s why I dig the Rio Tinto share price right now
• Why this leading fund manager’s favourite ASX 200 bank share is NAB
• Can the iron ore price regain its March highs in 2022?
• What does CommBank’s latest update mean for NAB shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price has been in fine form this week.

Since the start of the period, the mining giant’s shares have risen approximately 5% to $40.66.

This has been driven by a positive reaction to the Big Australian’s full year results for FY 2022.

Can the BHP share price keep rising?

The good news for investors is that one leading broker believes the BHP share price can keep rising from here.

According to a note out of Morgans, its analysts have retained their add rating with a price target of $48.00.

Based on the current BHP share price, this implies potential upside of 18% for investors over the next 12 months.

And that’s before dividends. Including the US$2.84 (A$4.11) per share fully franked dividend that Morgans is forecasting in FY 2023, the total potential return stretches to over 28%.

What did the broker say?

Morgans was impressed with BHP’s performance in FY 2022 and particularly its strong free cash flow generation. Overall, it believes this justifies its decision to choose BHP over rival Rio Tinto Limited (ASX: RIO). It also remains positive on its outlook and feels it has a stronger growth profile.

The broker commented:

A strong result from BHP, with earnings slightly ahead of expectations while positively surprising on both dividend and free cash flow (FCF) generation. The dividend surprise was the key highlight, which also drove a positive share price reaction on result day. BHP announced a US175 cent final dividend, ahead of both consensus US152 cents and MorgansE US136 cents.

Our long-term preference for BHP over RIO continues to pay dividends (literally), with BHP asserting itself as the better miner and with the stronger growth profile. We maintain our Add rating with an updated TP of A$48.00.

The post Is the BHP share price a buy after the miner’s FY22 results? appeared first on The Motley Fool Australia.

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• Can BHP shares keep cashing in on coal?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) continued its winning streak and pushed higher again. The benchmark index rose 0.3% to 7,127.7 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to snap its winning streak on Thursday after a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 15 points or 0.2% lower this morning. On Wall Street, the Dow Jones fell 0.5%, the S&P 500 dropped 0.7%, and the NASDAQ tumbled 1.25% lower. Overnight, the US Fed minutes revealed that interest rate hikes are likely to continue until inflation eases substantially.

Treasury Wine full year results

The Treasury Wine Estates Ltd (ASX: TWE) share price will be one to watch on Thursday. This morning the wine giant is scheduled to release its full year results for FY 2022. According to a note out of Citi, it expects the company to deliver a net profit after tax of $314.2 million. This is broadly in line with the market consensus estimate.

Oil prices rebound

Energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a better day on Thursday after oil prices rebounded on Wednesday night. According to Bloomberg, the WTI crude oil price is up 1.4% to US$87.72 a barrel and the Brent crude oil price is up 1% to US$93.30 a barrel. Traders were buying oil after US crude stockpiles fell.

Pro Medicus results

The Pro Medicus Limited (ASX: PME) share price will be on watch when the health imaging company releases its full year results. According to a note out of Bell Potter, its analysts are expecting revenue of $92 million, EBITDA of $65.7 million, and a net profit after tax of $44.9 million. The latter represents a 48% increase year over year.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a difficult day after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.6% to US$1,779.30 an ounce. Gold dropped for a third consecutive session following the release of minutes from the US Federal Reserve’s meeting.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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• The A2 Milk share price has climbed 10% so far this month. What’s going on?
• Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years
• Why did the Novonix share price nosedive 6% today?
• Here are the top 10 ASX 200 shares today
• Looking to buy IAG shares but worried about where the growth will come from? Read this

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The A2 Milk Company Ltd (ASX: A2M) has been frothing up a storm in August, shooting up 10%.

The company’s shares closed on Wednesday at $4.98 apiece after starting the month at $4.54.

So why has the A2 Milk share price been climbing lately?

The US opportunity

It seems its peer Bubs Australia Ltd (ASX: BUB) has regenerated excitement in the milk formula businesses after securing a major supply deal in the US and posting a stellar quarter for June 2022.

However, A2 Milk hasn’t experienced the same success. It has actually hit a bit of a roadblock in its bid for access to the US market, as outlined by my colleague Sebastian Bowen.

On 12 August, the US Food and Drug Administration (FDA) advised it had to defer further consideration for an enforcement discretion to import infant milk formula products into the United States.

According to the Sydney Morning Herald, another A2 Milk competitor Bellamy’s gained FDA approval shortly after Bubs.

Despite the hold up, A2 Milk CEO David Bortolussi remains confident. Bortolussi told the SMH the company had the relationships necessary on the ground to handle distribution and made the following comment:

Feedback from our US team on the ground is that the infant milk formula crisis has not been solved, with significant retail out-of-stock issues continuing across the country.

If Bortolussi’s optimism comes to fruition, a major contract in the US will act as a significant growth driver for the A2 Milk share price.

Another competitor considers ASX listing

The Australian Financial Review recently reported that another infant formula company Care A2 Plus is preparing for an ASX listing.

Care A2 Plus produces infant and toddler formula using single-sourced milk from Australian grass-fed A2 cows in Victoria. Unlike A2 Milk, it managed to gain approval from the FDA in early July to supply millions of tins to retailers short of supply.

The company advised the AFR that its first orders for Care A2+ Premium Infant Formula with iron were due to ship to the US in August.

Dominic Galati is the founder of Care A2 Plus and a former SBS executive.

Its chairman Walter Bugno said the company has more than 300 shareholders, including Chemist Warehouse.

A2 milk share price snapshot

The A2 Milk share price looks horrid across the last 12 months, falling 25% but the recent US shortage has driven it higher.

Across the same period, the S&P/ASX 200 Index (ASX: XJO) dropped 5% and like A2 Milk, it rallied with a 7% jump in the last month.

Given the roadblock and the potential listing of a competitor, which is already supplying to the US, it’s quite curious to see the A2 Milk share price climbing of late.

The post The A2 Milk share price has climbed 10% so far this month. What’s going on? appeared first on The Motley Fool Australia.

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• Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years
• Why did the Novonix share price nosedive 6% today?
• Here are the top 10 ASX 200 shares today
• Looking to buy IAG shares but worried about where the growth will come from? Read this
• Here’s why the Nickel Industries share price is climbing on Wednesday

Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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The Vanguard Australian Shares Index ETF (ASX: VAS) doesn’t hold the mantle of the most popular exchange-traded fund (ETF) on the ASX for nothing.

There’s little doubt that this ETF’s unique structure in being the only fund to track the S&P/ASX 300 Index (ASX: XKO) rather than the more popular S&P/ASX 200 Index (ASX: XJO), plays a role here. As does the brand reputation of (the famously not-for-profit) Vanguard.

But dividend distributions surely play a role here too.

After all, the ASX share market has a well-earned reputation as a bountiful source of dividend income. Thus, an index fund that tracks ASX shares will, by definition, reflect this. Just consider the VAS ETF’s top holdings.

Big four banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) dominate VAS’ weighting, as does the dividend machine that is BHP Group Ltd (ASX: BHP).

But let’s take a deeper dive and look at the numbers.

Five years of VAS dividend distributions

So VAS pays out dividend distributions every quarter. Here’s a summary of those payments over the past five years:

Date (quarter ending)	VAS Distribution (cents per unit)
30 June 2022	215.95
31 March 2022	199.59
31 December 2021	69.65
30 September 2021	140.73
30 June 2021	55.64
31 March 2021	77
31 December 2020	43.42
30 September 2020	56.84
30 June 2020	20.6
31 March 2020	67.27
31 December 2019	72.14
30 September 2019	107.1
30 June 2019	82.14
31 March 2019	91.59
31 December 2018	71.06
30 September 2018	112.74
30 June 2018	101.73
31 March 2018	66.53
31 December 2017	68.1
30 September 2017	100.88

If any reader would like a more concise version of this data, here it is:

• For the 12 months ending 30 June 2022, VAS paid out $6.26 in distributions per unit.
• For the 12 months to 30 June 2021, it was $2.33 per unit.
• The 12 months to June 30 2020 saw a total of $2.67 per unit.
• For the 12 months to 30 June 2019, it was a sum of $3.58 per unit.
• The 12 months to 30 June 2018 had VAS pay out $3.37 in distributions per unit.

Why so bumpy?

So what is immediately obvious is the massive dividend distribution haul investors have enjoyed over the past 12 months compared to prior years. This probably comes down to a couple of factors.

Firstly, the past 12 months have seen many ASX shares, especially the big four banks, raise their dividends to well above what was being paid out during the worst months and years of the pandemic.

Secondly, since ending its London dual-listing earlier this year and rehoming to the ASX in full, BHP now enjoys a far greater weighting in the ASX 300 Index than it used to.

As such, index ETFs like VAS now hold far more BHP shares, which is currently one of the most generous dividend-paying shares on the market, as a proportion of its overall portfolio today.

So that’s a summary of VAS’s dividend distribution history over the past five years. The most recent four distributions give this ETF a trailing yield of 7.07%.

The post Here’s how much the Vanguard Australian Shares Index ETF (VAS) has paid in dividends over the past 5 years appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Looking to buy IAG shares but worried about where the growth will come from? Read this
• Here’s why the Nickel Industries share price is climbing on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Corporate Travel Management Ltd (ASX: CTD) share price dropped 2.5% after the ASX travel share reported its FY22 result today.

As one of the world’s largest corporate travel businesses, it is highly aligned to the recovery of business travel.

But, despite positive commentary, investors weren’t impressed by what the business told the market overall.

What did the company report?

It revealed that total transaction value (TTV) increased 215% to $5.07 billion in FY22, with the fourth quarter showing $1.8 billion of TTV.

FY22 revenue rose 94% year over year. It generated $17.5 million of underlying net profit after tax (NPAT), which was a major improvement from the $32.3 million loss in FY21. According to reporting by The Australian, this is better than what the market and the broker RBC was expecting.

The broker thought the commentary about the fourth quarter of FY22 was “strong” and that demand looks “strong” too.

In a sign of future profit generation, it generated $20.5 million of underlying NPAT in the fourth quarter of FY22.

It even declared a dividend of 5 cents per share. The ASX travel share didn’t pay anything in FY21.

Investors like to look ahead

The Corporate Travel share price is usually forward-looking. In other words, the FY22 result is interesting, but what FY23 looks like (and beyond) is usually more important for investors.

In terms of what could have caused the decline of the business today, management noted that the travel industry has resourcing challenges.

It is facing “unprecedented resourcing shortfalls with corresponding challenges to service levels, airport and airline capacity”.

The company added 950 new employees during FY22 as part of its commitment to maintaining service levels to support customer travel needs.

It has engaged in several initiatives to manage this shortfall, including “innovative employee recruitment, training, onboarding and retention initiatives to attract and retain the business talent in the industry.”

The business is also focusing on delivering improved internal efficiency, by implementing advanced automation and new technologies across its operations, giving employees more time to deliver personalised customer service. Growing scale and technology investments are helping with productivity gains and the revenue per full time equivalent employee, which was 14% higher in the fourth quarter of FY22 compared to the FY19 average.

Trading update and demand

Corporate Travel said that revenue in June 2022 equated to 74% of the monthly average pro-forma revenue for FY19. It said that forward bookings for September are “strong”.

In a global customer survey, conducted in May 2022, around 80% of respondents said that they expect to travel “as much or more” in the coming 12 months as they did before the pandemic.

Corporate Travel is assuming a full recovery in FY24, based on projections for travel activity. This would be revenue of $810 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $265 million based on synergies and productivity improvements.

The recovery is not expected to be a straight line due to capacity constraints and Greater China’s current travel restrictions. But things are expected to progressively improve during FY23.

The post Corporate Travel share price slides despite earnings beat appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price is hurting today. It’s down 5.87% after the business reported its FY22 result to investors. But, it’s still up 22% over the past month.

Magellan is one of Australia’s largest fund managers. But, it’s now quite a lot smaller after the business suffered a major loss of funds under management (FUM) during the financial year.

Investors turned negative on the business as its investment funds underperformed compared to the global share market index. People and institutions pulled out billions of dollars of FUM during the year.

Adjusted net profit before tax dropped 12% to $515.2 million. The total dividend of $1.79 per share was a reduction of 15%.

Over the financial year, FUM plunged from $113.9 billion to $61.3 billion. Negative investment performance was the cause of $2.3 billion of negative movement. The $49.5 billion of negative net flows was the key reason for the decline.

Should investors get out?

According to The Australian reporting, one “veteran trader” says the business is “a basket case” and thinks “investors should get out while they can”. However, any interests in Magellan shares were not disclosed within the article.

The latest monthly update for FUM, being July, showed a drop in FUM to $60.2 billion, down from $61.3 billion at the end of June.

Committed to rebuild

The Australian reported that Magellan is “committed to rebuilding trust among clients and shareholders.” It quoted Magellan chair Hamish McLennan who said:

Our number one priority is to deliver on our clients’ objectives, which in turn will provide the foundation for revenue growth and returns for shareholders over the long-term.

We recognise that the global equities strategy has underperformed relative to the market over the past 18 months and that we must do better.

The new CEO and managing director, David George, said he will share his thoughts with shareholders in October.

But, George did indicate that the current investment landscape is a volatile and difficult one, which should “reward outstanding fundamental company research and active management of portfolios”. He went on to say:

Magellan remains an asset manager of scale, with considerable underlying financial strength and great potential. The strength of Magellan’s balance sheet provides us with significant headroom to invest in our business to deliver our clients and position ourselves for future growth.

During the year, Magellan’s total of cash, financial assets and investments in associates increased 7% to $963.3 million. It has no debt either.

Magellan said its focus is on its core funds management business, strengthening processes and driving consistent and improved investment performance. It’s “determined to rebuild value for clients and shareholders”.

The fund manager revealed that based on the FUM of $60.2 billion at 29 July 2022, retail fees make up 68% of the base fees, even though retail money only represents 38% of the FUM. If retail FUM proves to be more ‘sticky’ than institutional money, then this could be a positive mix.

Foolish takeaway

I did recently sell my own Magellan shares.

After the loss of FUM, FY23 profit is likely to fall again because of the loss of revenue. I recently wrote the following in my previous Magellan article:

The key thing for Magellan is to start generating some good performance in its key investment funds over longer time periods again. With relatively high fees, what will attract/retain funds if the investment fund is underperforming against its benchmark consistently?

Will the dividend and FUM keep falling? It’s really hard to say. But going for a declining business is not the type of investment I normally like to make.

The post Should Magellan shareholders ‘get out while they can’? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lifestyle Communities Limited (ASX: LIC) share price finished 0.23% higher today after the property developer and manager released its FY22 full-year results.

Lifestyle Communities develops and manages independent living residential land lease communities for senior citizens across Victoria. Lifestyle’s properties target retirees, semi-retirees, and working downsizers with plenty of recreational facilities and entertainment on site.

The Lifestyle Communities share price opened at $17.50 today, up 0.8% on yesterday’s close of $17.36. It then fell to an intraday low of $16.91 before rebounding again to close at $17.40.

Let’s take a look at the results.

Lifestyle Communities share price fluctuates after results released

The highlights of the results are as follows:

• Net profit after tax (NPAT) of $88.9 million, down 2.4% on the prior corresponding period (pcp)
• Underlying profit after tax of $61.4 million, up 69% pcp
• Total assets worth $1,006.2 million, up from $781.3 million pcp
• Net debt of $243.1 million, up from $187.7 million pcp
• Annuity income of $40.6 million, up 25% pcp
• 401 new home settlements, up 57% pcp
• 3,193 homes currently under management
• Final dividend of 6 cents per share payable on 6 October.

What else happened in FY22?

Lifestyle Communities said its annuity income increased due to a higher number of settlements and homes under management.

The annuity income included gross rental income of $29.7 million and deferred management income (DMF) of $10.9 million on resales.

The company also said increased property valuations lifted its statutory profit after tax to $89.9 million.

Over the 12 months, Lifestyle Communities acquired four sites, including the Phillip Island site in August 2021 and the Merrifield site in Mickleham in November 2021.

These acquisitions have put more than 2,150 new homes into the development pipeline. Managing director James Kelly says this will “underpin our continued growth for the next three to five years”.

Lifestyle now has more than 4,500 homeowners living in 19 operating communities across Melbourne and regional areas of Victoria.

Lifestyle Communities increased its dividend payment in FY22 by more than 30%, paying a total of 10.5 cents per share. The company paid 8 cents per share in FY21.

What did management say?

Kelly said FY22 had been challenging, mainly due to COVID-19 lockdowns:

To say this year was an unusual one for the business is an understatement.

Lockdowns for the first four months of the year were followed by a large upswing in demand through the Christmas/New Year periods as pent-up demand and a ‘life is short’ sentiment coming out of lockdown saw strong sales and increasing desire to free up equity through downsizing.

We continue to see new land acquisition opportunities come to market and are well funded to continue to purchase high quality sites that meet our investment criteria.

What’s next?

Lifestyle Communities plans to launch seven new sites for development and sale in FY23. This will take the total number of sites at various stages of development to 11 by FY25.

The company plans to deliver between 1,400 and 1,700 new home settlements between FY23 and FY25.

Lifestyle Bellarine will be the next site that Lifestyle takes to market in September 2022.

Share price summary

In FY22, the Lifestyle Communities share price hit a 52-week high of $23.85 in October 2021.

It then fell in line with the broader S&P/ASX All Ordinaries Index (ASX: XAO) until reaching a 52-week low of $11.34. The shares have since rebounded along with the rest of the market.

Overall, the Lifestyle Communities share price is down 16.2% over the year to date. This compares to a 5% fall in the All Ords.

Lifestyle Communities has a market capitalisation of approximately $1.81 billion.

The post Lifestyle Communities share price seesaws on FY22 results after ‘unusual’ year appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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