HMC +11.26%: Has come out with a much stronger FY27 outlook than the market expected, overshadowing a softer FY26 where operating earnings fell materially as transaction and performance fees normalised. The standout was FY27 underlying EPS guidance of 35c, around 30% above the 27c consensus, giving investors something tangible to look forward to after a year where the underlying funds management platform grew strongly but headline earnings went backwards.
Key results:
- FY26 underlying EPS of 30cps, ahead of ~28cps consensus.
- Management fee revenue rose 23% to A$159.3m, supported by Real Estate and a full-year contribution from Digital.
- Transaction and performance fees fell 55% to A$41.2m, with no performance fees recognised in FY26.
- FY27 underlying EPS guidance of 35cps, ~30% above the ~27cps the market had been expecting.
- Final dividend of 6cps, taking FY26 distributions to 12cps, flat on FY25.
The important distinction is between HMC’s recurring platform and the more volatile parts of earnings. Management fees grew nicely, but FY25 benefited from chunky transaction and performance fees that didn’t repeat, while higher interest costs associated with warehousing Energy Platform assets also weighed on FY26.
MM’s view: The 35c FY27 EPS guide is the number that matters today and it’s a cracking beat versus consensus, but we wouldn’t completely gloss over the composition of FY26. HMC is trying to build a larger, more diversified asset manager and the 23% growth in management fees is what we are looking for. FY27 guidance suggests the earnings engine is about to kick up a gear. If HMC can deliver that while continuing to shift the mix toward recurring management fees, rather than relying on transactions and investment gains, the quality of the story improves substantially.
MM remains long and bullish HMC
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