The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (WHSP) share price is in focus after the investment business announced its FY23 result.
WHSP is an investment house that’s invested in various sectors like telecommunications, resources, property, private equity and structured debt.
FY23 result
Here are some of the highlights from the report for the 12 months to 31 July 2023:
- Net cashflow from investments up 22% to $424.3 million
- Group regular profit down 9% to $759.3 million
- Group statutory profit after tax up $703.6 million to $690.7 million
- Net asset value (pre-tax) up 8.8% to $10.8 billion
- Total ordinary dividend per share up 20.8% to $0.87
- Final dividend per share increased by 18.6% to $0.51
Breakdown of highlights
Including dividends, the total investment portfolio achieved a return of 12.3%. That’s a helpful driver for the WHSP share price.
The net cash flow increased thanks to its strategic investment portfolio (cashflow up 75.4%) increasing dividends, namely TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC).
Total cashflow was also boosted by the structured yield cashflow rising 110.7%, partly due to increasing investments there. It made an internal rate of return of 14.7% in FY23 and the portfolio value was $652.4 million at the end of FY23, up from $250.3 million.
Regular profit fell because its (share of) profit from Brickworks Limited (ASX: BKW) and Aeris Resources Ltd (ASX: AIS) fell, and some of the profit was lost due to the sale of Round Oak in FY22 to Aeris.
During the year, it net sold $860 million from its large cap portfolio, which had been built up from the Milton acquisition. This cash will be used for future opportunities, and the cash is generating a current average yield of 5%.
The private equity segment made $288.7 million of acquisitions, including farms, swimming schools, Androck Engineering and Mining, and acquisitions within Ironbark. The private equity division is now valued at $1.2 billion.
Outlook for the WHSP share price
The business said that it has entered FY24 with more than $500 million in commitments. It has hired Jaki Virtue as the company’s chief operating officer, supporting plans for growing the portfolio, managing investment risk and generating cash.
In August, the WHSP net asset value outperformed the All Ordinaries Accumulation Index (ASX: XAOA) by 3.9%, making a good start to FY24.
I think the investment company is doing really well. I’m glad that I own shares and I hope to buy more over time because of its long-term focus and dividend growth, though I’m not sure if now is the best time to invest. If there is a pullback, I’d definitely be looking at buying some WHSP shares.
