Charter Hall Group (CHC)
HOLD

Result ahead, outline in-line

 25 Aug 2022
Sector: Financials

FY22 RESULT

Need to know:

  • Earnings 2-3% ahead, dividend inline
  • FY23 guidance in-line with the market
  • Jul/Aug FUM growth in-line with FY22 run rate

Investment implications

FY22 Results. Small earnings beat driven by strong transaction and performance fees. Clean results benefiting from strong market conditions, no signs of any fee pressure. Asset valuations +%. Expect flat consensus earnings revisions. The share price has halved since 4Q21, dropping the PER to 14x vs 17x LT average.  

Result Detail: NPAT $544m vs $529m market, EPS 1.15 vs 1.13 market, DPS 40cps in-line with market. NTA +28% to $6.26. 

FUM Fees: Base FUM fees 44bps in-line with long-term average. Transaction and performance fees represented 53% of total fees (long-term average 27%)

Balance Sheet: net cash balance sheet, look through gearing 24.9% vs 32.4% pcp. Leaves CHC with ~$800m of available balance sheet capacity. 

The development pipeline ended the year at $16bn vs $9bn pcp. This implies a strong runway for earnings delivery over the next few years.

Outlook: FY23 EPS at least 90cps, DPS growth at least 6% on FY22. Market is currently at 91cps and DPS 42.5cps representing 6% growth.

Our view: No issues with the Result. FY22 was a phenomenal year for CHC, with earnings +80% over FY21. With earnings growth expected in FY23, and share price down by ~40% since its peak in late 2021, clear value is emerging in CHC.

Forward earnings multiple of 14x PER compares to the long-term average of 17x, offering a rare opportunity to get set in CHC on a low multiple.

This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.

FIGURE 1: CHC PER MULTIPLE 1SD BELOW LT AVERAGE

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Stock overview

Key properties

Financial Forecasts

Share Price

Company overview

Australian-based property investment management company focused on investing in office, industrial, retail, and diversified social infrastructure property portfolios. Charter Hall operates through three segments: Property investments, Development investments, and Funds management.

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