The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (WHSP) share price is under the spotlight after reporting its FY23 half-year result.
WHSP is an investment house that owns a variety of different assets, including shares, private businesses, debt instruments and property.
HY23 highlights
Here are some of the highlights from the WHSP FY23 half-year result:
- Half-year dividend up 24.1% to $0.36 per share
- Regular profit up 38.4% to $475.7 million
- Statutory profit up $1.1 billion to $453 million
- Net asset value (NAV) (pre-tax) up 16% to $10.5 billion
- NAV pre-tax per share up 5.3%, up 7.4% including adding-back dividends
- Net cash flow from investments up 35% to $246.5 million
- Total shareholder return (share price plus dividend) of 14%, beating the All Ordinaries Accumulation Index by 4.3%
WHSP said that the main contributor to the performance was its strategic portfolio investments, helped by resource prices. That likely refers to coal miner New Hope Corporation Limited (ASX: NHC). It also noted solid gains from Brickworks Limited (ASX: BKW) and Apex Healthcare.
During the period, it was a net seller of large caps and small caps in its portfolios, reducing exposure to cyclicals and growth stocks in this inflation environment.
It said that higher-yielding instruments, such as private credit, is offering “more attractive, risk-adjusted returns” with WHSP investing an additional $267.9 million into its ‘structured yield’ portfolio.
WHSP also invested more in its private equity portfolio, meaning its privately owned businesses. It invested $152.8 million into agricultural and real assets.
It finished with a cash balance of $597.3 million, 257.7% higher than last year. This was helped by the settlement of the Castle Hill property in December for $88.5 million, 4.5x the original purchase price in 2014.
Outlook for the WHSP share price
It seems positive, with the total portfolio outperform the index by another 2% as the defensive portfolio settings “gain traction” in the current market.
WHSP has an active pipeline of investments under consideration, this is a good time for WHSP to buy other assets. It’s looking to put money into “robust, defensible business models and uncorrelated assets”.
The company also said there’s an opportunity for value pickers to take advantage of increasing price for risk.
I think that WHSP is one of the best businesses on the ASX, which is why it’s in my portfolio. I love the diversification, the defensive positioning and the growing dividend.
While I’m not buying any shares today, I expect I’ll be making at least one or two investments this year.
