Fund Manager Summary on McMillan Shakespeare Ltd (ASX:MMS)
McMillan Shakespeare Ltd (ASX:MMS) has shown strong performance recently, with a notable gain of 9.8% in August following a robust full-year result that exceeded expectations, particularly in the novated leasing segment. Fund managers highlighted the company's ability to maintain volume and yields despite regulatory challenges associated with the fringe benefits tax (FBT) exemption on plug-in hybrids. Strategic initiatives under the “Simply Stronger” program, including investments in technology and AI, are poised to enhance efficiency and customer service. However, ongoing regulatory risk concerning the FBT exemption review in 2027 could impact future performance. Overall, the consensus view indicates that the company's solid cash generation and attractive dividend yield, combined with the momentum from new contracts, represent key opportunities, though investors should remain cautious of potential market pressures in the evolving regulatory landscape.
Commentary From The Managers
There are 2 insights from 1 fund managers regarding their investment in McMillan Shakespeare Ltd (ASX:MMS) available on Thesis Tracker.
Unlock Updates With ThesisTracker Pro
Don’t let information asymmetry undermine your investment returns. Join other engaged investors on ThesisTracker Pro.
Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Perpetual Asset Management
31 Aug 2025
$19.63
Summary
- McMillan Shakespeare contributed positively to portfolio performance in August, gaining 9.8%.
- Full-year results were ahead of expectations, bolstered by strength in its novated leasing (GRS) segment.
- Volumes and yields remained strong into the fourth quarter despite the expiry of a fringe benefit tax (FBT) exemption on plug-in hybrids.
- Substitution into electric vehicles (EVs) and internal-combustion novated leases supported order growth.
- Contract wins and momentum in Oly, McMillan's newer platform offering, also underpinned growth.
- Management continues to deliver effectively on day-to-day execution and is progressing strategic initiatives under the “Simply Stronger” program.
- Investments in technology and AI are designed to improve efficiency and client service.
- Consensus FY26 earnings forecasts have been upgraded following the positive results.
- The stock trades on an undemanding valuation relative to peers while offering an attractive fully-franked dividend yield.
- Regulatory risk remains around the FBT exemption for EVs, scheduled for review in 2027, but the policy has helped broaden awareness and uptake of novated leasing.
Perpetual Asset Management
31 July 2025
$17.84
Summary
- McMillan Shakespeare was a top contributor in July (+14.7%).
- Leading provider of salary packaging and fleet management, with novated leasing at its core.
- Business is cash-generative with a strong record of dividends and buybacks.
- Shares rose as resilient earnings eased concerns over the loss of a South Australian Government contract and softer new-vehicle sales.
- Solid H1 FY25 cash generation and a more constructive outlook restored confidence that any earnings decline will be modest and short-lived.
- Supportive regulatory settings, particularly the FBT exemption for EVs, continue to drive demand.
- Deterra Royalties contributed positively (+10.4%).
- Australia’s only material pure-play resources royalty company offers exposure to high-quality mines.
- July’s gain reflected strong quarterly metrics, notably robust Mining Area C volumes.
- Diversified portfolio delivers stable cash flow with limited operating leverage.
- Earnings resilience, attractive yield, and portfolio optionality support confidence in long-term cash flows and upside.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in McMillan Shakespeare Ltd (ASX:MMS)?
Fund managers including Perpetual Asset Management have invested in McMillan Shakespeare Ltd (ASX:MMS).
Why do fund managers invest in McMillan Shakespeare Ltd?
Fund managers invest in McMillan Shakespeare Ltd due to its strong cash generation and a robust dividend history. The company is a leader in salary packaging and fleet management, benefiting from supportive regulatory frameworks, particularly the FBT exemption for electric vehicles, which drives demand. Resilient earnings and strategic growth initiatives have eased concerns about potential revenue dips. With favorable earnings forecasts and competitive valuation, McMillan Shakespeare presents an attractive risk/reward profile for long-term investment.
What happened to McMillan Shakespeare Ltd (ASX:MMS)?
There have been no recent updates from fund managers regarding McMillan Shakespeare Ltd although fund managers including Perpetual Asset Management have previously commented.
What is the short interest in McMillan Shakespeare Ltd (ASX:MMS)?
The short interest in McMillan Shakespeare Ltd (ASX:MMS) is 3.13% which makes it the 72nd most shorted stock on the ASX. Of the 69.6M shares that McMillan Shakespeare Ltd has on issue, 2.2M have been sold short.
What does McMillan Shakespeare Ltd (ASX:MMS) do?
McMillan Shakespeare Limited (MMS) is a Company that is engaged in salary packaging, novated leasing, disability plan management, support co-ordination, asset management and related financial products and services.