Near-Term Performance Disappoints but Doesn’t Undermine Magellan’s Economic Moat

Magellan’s first-half fiscal 2021’s earnings results were pedestrian, with adjusted NPAT down 2% on the prior period to AUD 213 million. The main detractor was a 70% drop in performance fees to AUD 12.4 million given Magellan’s underperformance in 2020. A lack of detail on the upcoming retirement income product (including launch date and pricing) is somewhat disappointing, though it also presents potential upside risk to our forecasts. We marginally cut our fair value estimate by 4% to AUD 57.50 per share, from AUD 60.00 previously, after revising forecast fund flows, operating margins and working capital.