Hyperion Australian Growth Companies Fund

Outlook

August saw the majority of the domestic portfolio holdings report their full year results, which were generally in line with our expectations. In general, the market struggled to achieve expected top line growth outside of the resources sector. Accordingly, high PE companies that didn’t exceed short term expectations observed aggressive share price reactions. In contrast to the broader market, the portfolios generated double digit revenue, EPS and DPS growth with a theme of continued reinvestment for long term growth. Despite some short term challenges, portfolio fundamentals remain robust and we expect them to continue to achieve above market growth over the longer term. We remain confident that the companies in the portfolios will achieve attractive rates of revenue, EPS and DPS growth over the next five years, well ahead of the broader market.

 

 Portfolio –
Net (%)
     Benchmark*
(%)
Excess
Performance (%)
 1 month 0.1 -2.3 2.4
 3 month 6.3 4.3 2.0
 1 year 2.6 9.1 -6.5
 3 years p.a. 7.6 11.3 -3.8
 5 years p.a. 9.4 7.9 1.4
 7 years p.a. 13.8 10.9 2.9
 10 years p.a. 10.3 8.5 1.8
 15 years p.a. 11.8 8.8 3.0
 Since Inception** p.a. 11.6 9.4 2.1
 Since Inception**^ 539.5 360.6 178.9

Top 5 Holdings

Portfolio (%) Benchmark* (%)
  REA Group 11.2 0.3
  Cochlear 10.9 0.7
  CSL 9.7 6.1
  Domino’s Pizza 7.1 0.1
  Macquarie Group 7.2 2.2

* Benchmark is the S&P/ASX 300 Accumulation Index.
** Inception date 30th September 2002
^ Total Return
Past performance is not a reliable indicator of future performance

Fund Review

REA Group Limited (REA-AU) released its annual results for the financial year ended 30 June 2019, reporting revenue growth of 8% to $875m, EBITDA growth of 8% to $501m and EPS growth of 6% to 224.3 cents per share. The strong result continued to highlight the resilience of its business model during difficult market conditions. National listing volumes declined 8% over the year, with declines of 18% and 11% recorded in Sydney and Melbourne, respectively. Categorically, revenue growth was driven by a 16% increase in Australian Media, Data & Other (13% of revenue) to $110m, +10% in Asia (6% of revenue) to $49m, +8% in Australian Residential Depth & Subs (72% of revenue) to $630m, +2% in Australian Commercial & Developer Depth & Subs (7% of revenue) to $59m, whilst Australian Financial Services revenue declined 8% (3% of revenue) to $27m. REA-AU continued to extend its engagement lead in Australia, with 2.98x the amount of site visits, 19% growth in monthly website searches to 94m, 21% growth in monthly app launches to 29.4m and 4.7x more time spent on its app compared to its nearest competitor, Domain (DHG-AU). In Asia, REA-US’s websites were rated the number one property sites in Malaysia and Indonesia, achieving site visits growth of 56% in Malaysia and 10% in Indonesia.

CSL Limited (CSL-AU) reported its full year results for the financial year ended 30 June 2019, reporting group revenue growth of 8% to $8.5b, gross profit margin expansion of 56bps to 56% and EPS growth of 11% to $4.24 per share. Divisionally, CSL Behring’s revenue was up 8% to $7.3b, with Immunoglobulin (IG) Product revenue up 16% to $3.5b due to an increase in the usage of IG products for chronic therapies. Albumin Product revenue was up 15% to $1.0b due to strong demand from China which is expected to continue as the company benefits from its transition to its own Good Supply Practice License in China, enabling CSL-AU to own and sell products in the domestic Chinese market. Furthermore, CSL-AU’s Seqirus revenue increased 10% to $1.2b, driven by Influenza vaccine product sales growth of 19% to $799m. Management noted that they plan to open 40 new plasma collection centers and expect FY20 net profit after tax to be approximately $2.05b to $2.11b.

OBJECTIVE: MEDIUM TO LONG-TERM CAPITAL GROWTH AND INCOME THROUGH INVESTING IN HIGH CALIBRE AUSTRALIAN COMPANIES PRIMARILY LISTED WITHIN THE S&P/ASX 300 AT THE TIME OF INVESTMENT.

 

 

 

 

Hyperion named AUSTRALIAN FUND MANAGER OF THE YEAR in the Morningstar 2016 Awards, Australia. 

The Fund’s Product Disclosure Statement contains more complete information on risks and fees.

CONTACT US
DISTRIBUTION PARTNER
Pinnacle Investment Management Limited
Tel: 1300 010 311
distribution@pinnacleinvestment.com
DOWNLOAD PDF COPY OF FUND UPDATE
DISCLAIMER – HYPERION AUSTRALIAN GROWTH COMPANIES FUND
Information for Financial Advisors only. Interests in the Hyperion Australian Growth Companies Fund (ARSN 089 548 443) (‘Fund’) are issued by Pinnacle Fund Services Limited (ABN 29 082 494 362 AFSL 238 371). Pinnacle Fund Services Limited is not licensed to provide financial product advice. Hyperion Asset Management Limited (ABN 80 080 135 897 AFSL 238 380), is the investment manager of the Fund. You should consider the current Product Disclosure Statement (‘PDS’) in its entirety and consult your financial adviser before making an investment decision. The current PDS of the Fund can be obtained via www.hyperion.com.au or by calling Hyperion at 1300 497 374 or via email to investorservices@hyperion.com.au. Pinnacle Fund Services Limited and Hyperion believe the information contained in this communication is reliable, however its accuracy, reliability or completeness is not guaranteed. To the extent permitted by law, Hyperion and Pinnacle Fund Services Limited disclaim all liability to any person relying on the information in respect of any loss or damage (including consequential loss or damage) however caused, which may be suffered or arise directly or indirectly in respect of such information contained in this communication. Any opinions or forecasts reflect the judgment and assumptions of Hyperion and its representatives on the basis of information at the date of publication and may later change without notice. The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. This communication is for general information only. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice relevant to their particular circumstances, needs and investment objectives. Past performance is not a reliable indicator of future performance. Unless otherwise specified, all amounts are in AUD. All data is as at 31st August 2019, unless otherwise stated. Morningstar Awards 2016 (c). Morningstar, Inc. All Rights Reserved. Awarded to Hyperion Asset Management for Fund Manager of the Year, Domestic Equities – Large Caps Category Winner and Domestic Equities – Small Caps Category Winner, Australia.
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