CHC -6.33%: delivered strong year-on-year earnings growth, but the result wasn’t strong enough relative to expectations. Several metrics fell short of consensus and FY27 guidance failed to provide the upside after a strong run in the stock.
Key results:
- Operating earnings of A$488.1m, up 27%.
- Operating EPS of A$1.032, up 27%, but below the ~A$1.086 implied by consensus estimates.
- Revenue of A$556.7m, up 2.2%.
- Net profit of A$427.9m, up 31%.
- Distribution of 50.67cps, up ~6%.
- Group FUM increased to A$94.3bn, including A$76bn of property FUM.
- Record gross equity inflows and A$17.1bn of property transactions during FY26.
CHC is guiding to FY27 operating EPS of around A$1.14, implying ~10% growth, with distributions expected to rise 6%. The underlying funds-management franchise is clearly improving as capital starts moving through commercial property again, but the market was already positioned for a meaningful recovery. Guidance also assumes no performance fees, which provides potential upside, although investors clearly weren’t prepared to pay today for earnings that may or may not eventuate.
MM’s view: This was a case of good absolute growth, but not a good enough result for the expectations embedded in CHC’s share price. Record equity inflows and A$17.1bn of transactions tell us the property funds-management engine is recovering, which is encouraging, but the earnings miss and relatively measured FY27 guidance explain today’s weakness. Today’s reaction is a reminder that CHC’s expectations had moved ahead of the numbers.
MM is neutral toward CHC preferring their CLW REIT & MGR in the property space
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