Microequities’ Profit Jumps 46% but Faces Market Inflow Challenges Ahead
Microequities Asset Management Group Limited has reported a robust 46.4% increase in profit after tax for the half-year ended December 2024, alongside a record $650 million in Funds Under Management and a raised interim dividend.
- 46.4% increase in profit after tax to $4.72 million
- Funds Under Management (FUM) reached a record $650 million, up 9%
- Operating profit from investment management grew 13%
- Declared fully franked interim dividend of 1.9 cents per share, up 5.2%
- Balance sheet investments increased to $21.8 million, reinforcing alignment with clients
Strong Financial Performance Despite Market Headwinds
Microequities Asset Management Group Limited (ASX: MAM) has delivered a compelling half-year performance for the period ending 31 December 2024, reporting a 46.4% jump in profit after tax to $4.72 million. This surge comes amid a challenging market environment characterised by increased competition and subdued gross inflows into alternative assets.
The company’s Funds Under Management (FUM) hit a new high of $650 million, marking a 9% increase over the previous corresponding period. This growth was primarily driven by strong absolute and relative returns across its flagship funds, including the Deep Value Fund, Pure Microcap Value Fund, and Global Value Microcap Fund.
Operational Efficiency and Dividend Growth
Operating profit from investment management rose 13% to $4.1 million, reflecting Microequities’ ability to leverage operating efficiencies while maintaining disciplined cost control. Recurring revenue climbed 9% to $5.5 million, underscoring the resilience of its fee base despite a modest 5% decline in performance fee income to $637,000, which remains inherently volatile.
In line with its commitment to shareholder returns, the Board declared a fully franked interim dividend of 1.9 cents per share, a 5.2% increase from the prior period. This dividend aligns with the company’s policy to distribute between 70% and 100% of cash operating profits from investment management operations.
Balance Sheet Strength and Strategic Alignment
Microequities has significantly increased its balance sheet investments in its own funds, from $2.8 million at IPO in 2018 to $21.8 million as of December 2024. This growing stake enhances alignment with clients and signals confidence in its investment strategies. The company ended the half with $6.8 million in cash and net tangible assets of $23.5 million, up 14.1% year-on-year.
Outlook and Market Positioning
Looking ahead, Microequities remains cautiously optimistic. While broader market inflows have yet to rebound significantly, the company anticipates that upcoming Reserve Bank of Australia rate decisions and the compelling return profile of its asset class will attract new investors. The recent refresh of its business development team and tactical investments in sales and marketing are designed to capitalize on improving investor sentiment and growth opportunities in the second half of FY25.
CEO Carlos Gil emphasised the firm’s long-term focus on delivering consistent outcomes for shareholders and clients, underscoring the strategic importance of both investment performance and operational discipline in a competitive landscape.
Bottom Line?
Microequities’ strong half-year results and strategic initiatives position it well, but sustained growth hinges on navigating competitive pressures and market inflows.
Questions in the middle?
- Will Microequities sustain its performance fee income amid market volatility?
- How will increased competition from private credit offerings impact future fund inflows?
- What specific tactical initiatives will the refreshed business development team implement to drive growth?
