Real Estate Giant Charter Hall Group (ASX:CHC) reported its full FY15 results with solid growth in both earnings and funds under management.
The company reported a statutory profit of $117.9 million, up 43.6 per cent on the previous corresponding period. Operating earnings came in at $98.8 million, up 21.7 per cent with operating earnings per security coming at 27.5 cents, up 8.7 per cent. Distribution per security increased by 8.5 per cent to 24.2 cents and net tangible assets per security gained 16.0 per cent to $2.76.
During FY15 the company experienced 18 per cent growth in Australian funds under management to $13.6 billion. It managed to secure $1.7 billion of gross equity inflows and completed $2.6 billion of property transactions. The company co-invested a further net $187 million into property funds and Property Funds Management EBITDA margin increased from 36.2 per cent to 40.1 per cent.
Charter Hall’s Joint Managing Director, David Southon commented, “The Group has achieved solid growth across its Australian property platform to deliver a 21.7% increase in operating earnings and a total security-holder return of 11.8%. Pleasingly, we have seen continued growth in both the Group’s key earnings streams, with Property Investment earnings increasing by 17.3% and Property Funds Management earnings by 25.2%.”
With the additional $187 million of co-investment, the Group’s balance sheet investments increased by $224 million to $944 million, generating an investment yield of 7.5 per cent per annum. Following restructuring of the portfolio, it now has a weighted average lease expiry of 9.1 years, up from 7.6 a year ago, with a stable occupancy ratio of 97.7 per cent.
Looking into FY16, in the absence of unexpected events, the company expects 5-7 per cent growth in operating earnings per security and aims to maintain a pay-out ratio of between 85 – 95 per cent of operating earnings per security.
Charter Halls share price has been largely flat over the last twelve months. Following today’s results there has been little change in the share price as the results were within expectations. The company has performed fundamentally well over the long term and we remain confident in their future profitability. The market has been largely to blame for the flat performance of Charter Hall’s share price this year and we expect the share price to continue on its long term ascending channel once the dust settles.
Author: Tim Morris
Aug 26, 2015
Having studied Commerce and Science at the University of New South Wales, Tim began his career in an analytical capacity with Wise-owl. Tim has conducted over 500 corporate valuations and appraisals, specialising in pre revenue assets and emerging markets. For the last five years, his Equity Capital Market insights have been featured as part of a weekly column in The Australian and regularly features on Sky News, CNBC, ABC and Bloomberg TV.