AI accelerates operating leverage

Research evidence excerpt

AI accelerates operating leverage

Macquarie Equity Research Qualitas

Investment thesis

We reiterate our Outperforming rating on QAL given a strong fundraising track record

reflecting a robust investment track record and high-calibre investment team. Despite some

peers experiencing challenges over the last 1-2 years, QAL has consistently delivered robust

EPS growth and strong fund performance. While we estimate a strong 2yr EPS CAGR of

~24% (12mth forward), we believe our estimates remain conservative with sizeable upside

risk should QAL deliver in line with plans. Finally, we believe valuation remains compelling, with

QAL shares currently trading at a 17.7x 12mth forward PE, equivalent to a ~26% discount to

the long-term average PE of 24x. Our revised TP of $3.95 implies a 36% TSR (incl 4.1% yield).

Earnings revisions

We amend our FY26E EPS -2.5%, FY27E -1.7%, and FY28E +10.5%, reflecting a

comprehensive review of the model following a recent transfer of coverage and capturing

operating leverage/AI benefits from FY28E.

Valuation

We derive our 12-month target price of $3.95 ($4.16 previously) based on the average of our

DCF and PE relative valuation.

We amend our valuation methodology from solely SOTP to the average of DCF and PE

relative valuation to better capture all valuation scenarios and also the benefit of consistent

long-term growth underpinned by continued elevated fundraising. We note our valuation

approach is consistent across our coverage universe.

We detail each methodology as follows:

• DCF: We use a three-stage DCF (0-7 years, 8-10 years, and +10 years) with varying WACCs

for each period, driven by both differing cost of equity and cost of debt.

• PE relative: Our PE relative valuation reflects the stock's historical average PE relative of