CNI -10.53%: Was hit hard after slightly missing EPS estimates, despite management guiding to a meaningful lift in profit in FY27. Today’s reaction is overwhelmingly about Centuria Bass Credit and its A$278m exposure to collapsed developer Bathla.
Key results:
- Operating profit of A$113.8m, up 13% and essentially in line with A$114.0m expected.
- Operating EPS of 13.6c, below consensus of 14.0c.
- Statutory NPAT of A$56.5m, versus consensus of A$113.3m, although statutory earnings are distorted by non-operating and valuation items.
- Revenue of A$310.0m, comfortably ahead of A$266.3m expected.
- EBIT of A$175.2m, around 5% ahead of A$167.3m expected.
- EBITDA of A$182.5m, around 2% ahead of A$179.2m expected.
- Distribution of 10.4cps for FY26, in line with guidance.
FY27 guidance points to operating NPAT of A$130m, above FY26, with EBIT expected to grow around 20% and the distribution held at 10.4cps. Operating EPS guidance of 13.0c, however, sits below current consensus of 14.4c, so the per-share earnings outlook isn’t as strong as the headline profit growth suggests. The elephant in the room remains Centuria Bass, where A$278m is secured across six Bathla projects and redemptions have been frozen in two funds. Management expects those funds to reopen within two to six months and remains confident in the underlying security, but that’s now something investors will want to see rather than simply hear.
MM’s view: Revenue and EBITDA were ahead, operating profit was in line and management is talking about 20% EBIT growth in FY27. However, CNI has pushed hard into private credit as a growth engine, and Bathla is the first serious test of whether those attractive returns have come with risks investors weren’t properly accounting for. If Centuria recovers its Bathla exposure without material losses and reopens the funds within six months, today’s sell-off could prove overdone; until then, we’d expect the market to remain sceptical and put a discount on the private-credit earnings stream.
MM is neutral toward CNI, preferring CLW for property exposure
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