Welcome to this ASX World Cup knockout game between Macquarie Group Ltd (ASX: MQG) and ResMed Inc. (CHESS) (ASX: RMD). This is an interesting match up between two business that offer Australian investors overseas exposure to diversify their portfolios away from reliance on the domestic economy.
Pre-match commentary and stats
Australia's isolated time zone means its generally asleep while the rest of the world's capital markets are open, and this means Macquarie is used to playing away from home, with around 68% of income derived from abroad. ResMed's sleep treatment products are unable to alter time zones, but their global reach sees around 90% of income derived from abroad.
| Macquarie | ResMed | |
| Code | ASX:MQG | ASX:RMD |
| Recent Price | $58.99 | $5.30 |
| Market Capitalisation | $19.15 billion | $7.69 billion |
| Dividend Yield / Franking | 4.6% | 40% | 1.7% | 0% |
| Projected P/E ratio 2015 | 14.7 | 18.8 |
| Price-Book ratio | 1.68 | 4.48 |
Source: Morningstar / Thomson Consensus Estimates.
The match kicks off with the defensive ResMed team against the bankers with a reputation for innovation and hard work in the holy mission for goals (bonuses). ResMed also invests in research and development to bring new products to market, while attempting to recruit the best science graduates from Australian universities. These two teams can't be separated on their commitment to the future and the scores remain level.
0-0 at half time.
Central to ResMed's past performance has been gross margin expansion ahead of expectations and that's why the market values it highly trading on nearly 19 times forecast earnings. Macquarie sells for a lower forward price-earnings, but remains heavily leveraged to the health of global capital markets. Any slip up there and earnings could come under serious pressure, meaning ResMed's defensive setup sees it score! 1-0 to ResMed.
Income-seeking fans would prefer Macquarie with a yield of 4.6%, versus ResMed's 1.7%. That's an equaliser to the bankers on income and these two top teams cannot be separated heading into extra time at 1-1.
Macquarie seem to be prepared to take more risks going into extra time, in fact they're claiming they have some of the best risk management in the world! The bankers also have a strong reputation for equity research and when they say they do fundamental analysis of a company, they're not joking! Research on a single medium-sized medical business may involve them attempting to survey more than 14,000 medical professionals globally, just for their opinion on a single company's product! With a reputation for working hard and late in the quest for goals (bonuses), the Macquarie team gets the winner to take it into the next round! 2-1 to Macquarie!
