In This Article:
Release Date: September 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cadence Capital Ltd (ASX:CDM) reported a full-year profit of $21.6 million, with the fund up 10.4%, indicating strong financial performance.
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The company declared a final dividend of $0.03, bringing the annual dividend to $0.06 per share, equating to an annualized yield of 8.6% and a grossed-up yield of 12.2%.
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Successful investments in Meta Platforms, Netflix, and the Karora/Westgold merger contributed significantly to the fund's positive returns.
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The portfolio is highly liquid and diversified, with 87% of the portfolio capable of being liquidated within a week.
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Meta Platforms and Netflix showed strong EPS growth expectations for 2024, with Meta's shares up over 75% and Netflix's shares up more than 50% over the last financial year.
Negative Points
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Investments in Sierra Rutile, Zillow, and Syrah Resources were detractors from the fund's performance.
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The performance of resource companies was mixed, with poor results from lithium investments and a decline in coking coal prices affecting Whitehaven Coal's share price.
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Earnings growth for companies has been declining over the past two years, with PEs for stocks increasing, presenting a challenging investment environment.
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The slowdown in China's economy has negatively impacted industrial commodities, affecting Australia's largest exports like coal and iron ore.
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Interest rates are expected to remain volatile, with potential implications for investment strategies and economic stability.
Q & A Highlights
Q: Can you provide an overview of Cadence Capital's financial performance for the year? A: Karl Siegling, Executive Chairman and Managing Director, reported that Cadence Capital Ltd achieved a 10.4% increase in fund performance, resulting in a profit of $21.6 million. The company declared a final dividend of $0.03 per share, bringing the annual dividend to $0.06 per share, equating to an annualized yield of 8.6% and a grossed-up yield of 12.2%.
Q: What were the key contributors and detractors to the fund's performance? A: Karl Siegling highlighted that successful investments included Meta Platforms, Alumina, Netflix, the Karora/Westgold merger, Whitehaven Coal, Capstone Copper, and Austin Engineering. Detractors were Sierra Rutile, Zillow, and Syrah Resources. The fund benefited from investing in turnaround situations like Meta and Netflix.
Q: How has the performance of resource companies impacted the fund? A: Karl Siegling noted mixed results in resource investments. Companies like Capstone Copper, Alumina, and Westgold Resources performed well, while investments in lithium mining underperformed. Whitehaven Coal's performance was strong post-acquisition of BHP assets, but recent declines in coking coal prices have affected its share price.