Bullish indicating open at $55-$60, IPO prices at $37
On Sunday, Jefferies began coverage on HMC Capital (HMC:AU), an alternative asset management firm, with a Buy rating and a price target of AUD7.62. The new assessment is based on the company’s strategy to grow assets under management (AUM) by leveraging macroeconomic megatrends.
HMC Capital’s business model, which requires minimal capital investment, has allowed the company to gain exposure across various sectors, including real estate, private equity, private credit, digital infrastructure, and energy transition. According to Jefferies, this diversified approach positions HMC Capital to capitalize on growth opportunities within these industries.
The research firm highlighted HMC Capital’s impressive financial outlook, projecting an adjusted earnings per share (EPS) compound annual growth rate (CAGR) of 25% over the next three years. Additionally, Jefferies anticipates a total shareholder return (TSR) of more than 35%, reflecting a positive view on the company’s future performance.
The initiation of coverage and the setting of a price target come as Jefferies expects HMC Capital to benefit from its capital-light business model. This model enables the firm to scale its operations efficiently while minimizing the need for significant capital expenditures.
In summary, Jefferies’ coverage initiation on HMC Capital underscores the firm’s confidence in the asset manager’s growth trajectory and its ability to deliver strong returns to shareholders. The Buy rating and the price target of AUD7.62 reflect the potential that Jefferies sees in the company’s strategic focus and market positioning.
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