Morningstar | McMillan Shakespeare's earnings are vulnerable to changes in FBT legislation.
McMillan Shakespeare is Australia's leading provider of salary packaging and novated leases. It also has vehicle leasing and fleet management and consumer finance businesses, but it is the capital-light salary packaging and novated leasing business that generates its high returns on invested capital. McMillan may benefit from some switching cost advantages, and its integrated business model provides cross-selling opportunities and cost savings. However, we think these are insufficient to provide it with a sustainable competitive advantage, especially given the regulatory risks it faces, particularly with respect to the fringe benefit tax. The potential for FBT changes hurting salary packaging and novated leasing prompted McMillan to diversify into lower-margin consumer finance, as well as further into the U.K. However, salary packaging and novated leasing remain its key source of high-margin growth.McMillan Shakespeare provides capabilities in novated leasing, salary packaging, associated Fringe Benefits Tax administration and management, operating leases and asset management. Co.'s segments are: Group Remuneration Services, which provides administrative services in respect of salary packaging and facilitates the settlement of motor vehicle novated leases for customers; Asset Management, which provides financing and ancillary management services associated with motor vehicles, commercial vehicles and equipment; and Retail Financial services provides retail brokerage services, aggregation of finance originations and extended warranty cover.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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