February saw most of our domestic portfolio companies release their half or full year results. The results were generally positive with the companies reporting solid sales and EPS growth. While some of the companies cited adverse macroeconomic conditions and other short-term challenges, we maintain a long-term perspective of a company’s performance and growth potential. REA-AU performed particularly well, delivering a strong result despite a backdrop of challenging domestic property market conditions, further highlighting the strong value proposition the company offers all stakeholders.
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.
|3 years p.a.||20.6||13.4||7.2|
Top 5 Stock Holdings
|Portfolio (%)||Benchmark* (%)|
|Alphabet Inc. Class A||11.1||0.9|
|Facebook, Inc. Class A||8.2||1.0|
|Mastercard Incorporation Class A||6.3||0.5|
* Inception date: 1st June 2014. Benchmark is the MSCI World Index (AUD).
Past performance is not a reliable indicator of future performance.
Alphabet Inc. (GOOGL-US) released its full year 2018 results, reporting revenue growth of 22% to $136.8b and EPS growth of 244% to $44.22 per share. Regionally, U.S. revenue (46% of revenue) was up 21% to $63.3b, EMEA (33% of revenue) +24% to $44.6b, APAC (16% of revenue) +32% to $21.3b, and Other Americas (6% of revenue) +24% to $7.6b. At the segment level, Google advertising revenue grew 22% to $116.3b driven by the continued shift of consumers to using mobile search, while Other Revenue was up 33% to $19.9b driven by Google Cloud, Google Play and Hardware. Other Bets revenue increased 25% to $595m which was primarily generated by Fiber, an internet and television service provider and Verily, GOOGL-US’s research organisation dedicated to the study of life sciences. Management highlighted that it now has 8 products with more the 1 billion users each and that YouTube Music and YouTube Premium is now available in nearly 30 countries, up from 5 countries at the start of 2018.
Intuit Inc (INTU-US) released its result for the second quarter ending 31 January 2019, reporting group revenue growth of 12% to $1.5b, operating income margin expansion of 102bps to 16% and operating income growth of 20% to $233m. Divisionally, the company’s Small Business & Self-Employed division achieved revenue growth of 17% to $833m, operating income margin expansion of 223bps to 38% and operating income growth of 24% to $320m. Consumer revenue increased 11% to $461m and operating income was up 9% to $164m, whilst Strategic Partner revenue was down 1% to $208m but achieved operating income margin expansion of 171bps to 80%. The company’s online ecosystem revenue increased 38% to $394m, while desktop ecosystem revenue was up 3% to $439m. QuickBooks Online subscriptions increased 38% resulting in a subscriber base of nearly 3.9m at the end of the quarter. Management expects revenue growth of 8% to 10% and EPS growth of 3% to 5% share for the full fiscal year.
Wayfair Inc (W-US) released its full year 2018 result, reporting Direct Retail net revenue growth of 44% to $6.8b. Geographically, the company continues to see growth across both the U.S. and Internationally, with Direct Retail revenue up 40% to $5.8b and up 70% to $966m respectively. The number of active customers in the company’s direct retail business increased 38% to 15.2m, with net revenue per active customer increasing 5% to $443. 66% of total orders during the fourth quarter were from repeat customers with orders from these customers increasing by 51% to 5.8m, each placing 1.85 orders at an average order value of $227.
OBJECTIVE: LONG-TERM CAPITAL GROWTH AND INCOME BY INVESTING IN HIGH QUALITY GLOBAL COMPANIES PRIMARILY LISTED WITHIN THE MSCI WORLD MARKETS AT THE TIME OF INVESTMENT.
Hyperion named AUSTRALIAN FUND MANAGER OF THE YEAR in the Morningstar 2016 Awards, Australia.
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