Fwd: Apollo Global Management LLC: Softer 2Q Results But Strong Forward Look; Reiterate Overweight
Apollo Global Management LLC: Softer 2Q Results But Strong Forward Look; Reiterate Overweight
Michael J. Cyprys, CFA, CPA — Morgan Stanley
Apollo's softer 2Q results reflect a deceleration in performance fee marks in Fund VIII, which will likely weigh on the stock near-term. But appreciation can't be judged in a single quarter, particularly on the back of 16% appreciation in LTM and 29% during 2017. Looking ahead, we expect Fund VIII performance to rebound, and also expect portfolio monetization activity to accelerate in 2019-2020 boosting cash earnings and the dividend. We see opportunities in continued growth in management fee earnings, driven by organic flows as well as potential strategic actions to grow the platform, which will deliver future earnings power. Reiterate Overweight. APO reported 2Q EPS of 27c, below MSe 46c and consensus 54c. Net performance fee revenue of $38.3m fell short of MSe of $111.8m from lower PE marks. Accrued carry receivable balance was flat q/q and up 9.5% y/y to $756.1m, attributable to a softer quarter in Fund VIII performance fees. Fee related earnings of $185.7m slightly below MSe of 192.1b, a 40% step up q/q, driven by the activation of fees on Fund IX. FRE margin improved to 54.4% vs MSe 53.9% and 1418 of 46.6%. Cash earnings of 53c was better than MSe of 48c from realized investment income. Dividend of 43c in line with Mse and 5c above consensus. Fundraising of $24.1b and net flow to fee-paying AUM of $20.3b were driven by the close of an insurance strategic transaction.
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Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.
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Apollo Global Management LLC: Softer 2Q Results But Strong Forward Look; Reiterate Overweight
Michael J. Cyprys, CFA, CPA — Morgan Stanley
Apollo's softer 2Q results reflect a deceleration in performance fee marks in Fund VIII, which will likely weigh on the stock near-term. But appreciation can't be judged in a single quarter, particularly on the back of 16% appreciation in LTM and 29% during 2017. Looking ahead, we expect Fund VIII performance to rebound, and also expect portfolio monetization activity to accelerate in 2019-2020 boosting cash earnings and the dividend. We see opportunities in continued growth in management fee earnings, driven by organic flows as well as potential strategic actions to grow the platform, which will deliver future earnings power. Reiterate Overweight. APO reported 2Q EPS of 27c, below MSe 46c and consensus 54c. Net performance fee revenue of $38.3m fell short of MSe of $111.8m from lower PE marks. Accrued carry receivable balance was flat q/q and up 9.5% y/y to $756.1m, attributable to a softer quarter in Fund VIII performance fees. Fee related earnings of $185.7m slightly below MSe of 192.1b, a 40% step up q/q, driven by the activation of fees on Fund IX. FRE margin improved to 54.4% vs MSe 53.9% and 1418 of 46.6%. Cash earnings of 53c was better than MSe of 48c from realized investment income. Dividend of 43c in line with Mse and 5c above consensus. Fundraising of $24.1b and net flow to fee-paying AUM of $20.3b were driven by the close of an insurance strategic transaction.
This alert is sent from:
Andrew Atlas,
You received this because you requested that you receive content and reports from: APOLLO GLOBAL MANAGEMENT, LLC
Please contact your FA if you want to unsubscribe from the alerts.
Disclosures:
Please see the full report for risks, disclosures and other important information.
Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.
Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule.
Copyright
The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.
| © 2018 Morgan Stanley Smith Barney LLC. Member SIPC.