How did Washington H Soul Pattinson (ASX:SOL) perform in 1H FY21?

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Summary

  • SOL reported a profit after tax of $90.2 million compared to $124.7 million for the previous corresponding period.
  • Dividends are paid out of the net cash flows from the investments, which fell by 8% on the prior corresponding period.
  • SOL’s share price has notched up by 1.97 per cent to A$31.58 (as of 10:42 AM AEDT).

On 25 March 2021, Washington H Soul Pattinson and Company Limited (ASX:SOL) released its 1H FY21 results for the six months ended 31 January 2021. The profit after tax attributable to shareholders for the reported period was $90.2 million compared to $124.7 million for the previous corresponding period.

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The reduced contribution from the Telecommunications portfolio due to FY20 derecognition of TPG as an associate (eliminating any profit recognition during the half). Equity accounted share of the start-up losses at Tuas Limited, also attributed to the reduced profit.

Dividends are paid out of the net cash flows from the investments, which fell by 8% on the prior corresponding period. This is a strong performance given the fact that a drastic reduction in the dividend received was witnesses from New Hope Corporation, and the lower final FY20 dividends were received from several other companies in the investment portfolio.

The company also continued its strong track record of outperforming the broader market over the long-term, with its total shareholder returns exceeding the All Ordinaries Accumulation Index over periods of 1, 5, 10, 15 and 20 years.

During the 1H FY21, the COVID-19 pandemic continued to have a significant impact on all businesses. While some of the subsidiaries were impacted to varying degrees, the company was relatively unaffected.

The outlook for the domestic and global economies remains uncertain and volatile. One of WHSP’s critical advantages to generating returns is its flexible mandate to make long-term investment decisions and adjust the portfolio by changing the mix of investment classes over time. The company maintains a robust balance sheet with solid liquidity and modest gearing.

Read More: Washington H. Soul Pattinson and Company Declared Dividend of 60 cents

Stock Performance

SOL’s share price has notched up by 1.97 per cent to A$31.58 (as of 10:42 AM AEDT). The stock has delivered a decent return of 32.4 per cent in the last six months, while one-year return stands at 60.88 per cent.

Total return for the last six months: SOL (Yellow) & XJO (Purple) (Image Source: Refinitiv, Thomson Reuters)

In the last six months, the stock has also outperformed the broader market index ASX 200 by a fair margin as the latter has delivered a total return of 17.11 per cent.

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