MPC Capital has been consistently transitioning its assets under management (currently at €4.2bn) away from retail legacy assets to new, higher-margin institutional business, which represented 61% of NAV at end-June 2019 (vs 52% at end-June 2018). This translated into a 6% y-o-y increase in management fees, which has offset the impact of muted transaction activity in H119. Moreover, MPC was able to realize profits from disposals (which represent the majority of investment income in H119) and completed new meaningful co-investments in H119.
MPC reported net income of €1.2m in H119, down from €2.8m in H118. The decline is largely due the €4.0m reversal of receivables write-downs recognized last year. H119 earnings were supported by income from equity investments of €5.4m (vs €1.4m in H118) on the back of disposals from the TRANSIT and BMG portfolios (contributing c €4.2m). Other operating income was also assisted by the BMG deal, while last year MPC booked a €2.8m gain on the opportunistic sale of a land plot in Lisbon. Revenue went up by 1.5% y-o-y, with lower transaction fees (-34% y-o-y to €1.8m) offset by higher management fees (up 6% to €17.8m).
Conditions in the shipping markets remain uncertain amid the ongoing US-China trade dispute and global economic slowdown. Together with the looming 0.5% sulphur cap on marine fuels imposed by IMO 2020, this encouraged market participants to further increase efficiency and utilise economies of scale. This has driven demand for large (post-panamax) vessels. Despite lower transaction volumes (eg in Germany), real estate markets have remained robust so far this year. The low interest environment continues to support investment demand for real assets.
MPC remains affected by its legacy retail portfolio and volatile market environment, which may be partially responsible for the substantial share price decline in 2018 and H119. MPC is trading at a visible premium to peers on FY20e P/E and EV/EBITDA ratios (which changes into a discount in FY21e). Its current market cap stands at c 1.4% of its AUM at end-June 2019 and translates into a P/BV ratio of 0.5x.
