Charter Hall Group (CHC)
BUY

Stabilising outlook

 21 Aug 2023
Sector: Financials

RESULT ANALYSIS

Need To Know

  • In-line result. FUM remained resilient and occupancy improved
  • Balance sheet in a strong position. Gearing low and hedging comfortable
  • Outlook positive. Development pipeline remains robust

Result Overview:

Operating Earnings A$441m vs A$430m consensus

Operating EPS (OEPS) 93.3cps vs 91.3cps consensus

DPS 42.5cps vs 42.5cps consensus

Group FUM A$87.4bn and Property FUM A$71.9bn, both up +9%

Investment Implications

Overall an in-line result. Earnings were resilient for the period, OEPS was marginally ahead of consensus and DPS was in-line. The funding period structure on FUM meant that outflows remained minimal. Group FUM was A$87.4bn (up 9.4%) and property FUM was A$71.9bn (up 9.5%). Occupancy saw minor improvement (up 0.3% to 97.6%), largely driven by industrials strength and a recovery in office. 

The balance sheet is in strong position. Gearing is 2.22% (0% previous) and look-through 33.6% (24.9% previous). Hedging is 59% (up 2%). NTA up 2 cents to A$6.28. A$7.4bn in new and refinanced debt facilities were completed over the period. 

FY24 Outlook: In-line with street expectations (DPS growth of 6%, OEPS of 75cps). Development pipeline remains robust at ~A$14bn with A$6.6bn committed. 

Investment View

With the share price weakness running into the result, we expect todays release to help quash some of the fears the market was expressing around FUM outflows and devaluations in assets. 

At a PER of 12.6x (a +1 SD discount to its long-term average), we expect the resilient performance should help support a re-rating in the multiple. Management flagged that they still expect conditions to be tougher than normal in FY24 although there are clear signs that stabilisation is underway. 

We re-affirm our Buy rating. 

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Stock Overview

Share Price

Company Overview

Australian-based property investment management company focused on investing in office, industrial, retail, and diversified social infrastructure property portfolios.

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