Equity Analysis /
Australia

AU : WH Soul Pattinson & Co - 1H22 result highlights cyclical tailwinds

    Steven Sassine
    Steven Sassine

    Research Associate

    CGS-CIMB
    27 March 2022
    Published by

    SOL released its 1H22 result, which highlighted the continuation of strong contributions from some of its core investment holdings (e.g. NHC, BKW, Round Oak). In our view, it was a solid result overall, with favourable conditions for some of SOL’s more cyclical assets helping to generate a Net Cash from Investments outcome of ~A$183m (+114% on pcp). Post the MLT acquisition completion, SOL’s portfolio NAV ended the period at ~A$9.04bn. Underlying group NPAT was ~$344m, +281% on pcp (Stat NPAT of -A$643m included a A$954 non-cash goodwill impairment generated from the acquisition). We alter our FY22F/FY23F/FY24F underlying NPAT estimates by ~-30% to +10% factoring in the 1H22 result and further improvements to our near-term yield assumptions post the recent results of core portfolio holdings. Our DDM/SOTP -derived price target is lowered to A$30.60 based on the above changes and the inclusion of updated forecasts to key holdings covered by Morgans. With > 10% TSR upside to our price target, we upgrade to an Add recommendation (from Hold).