Jeez, they've been busy over the past 6 months, with the launch of two new Retail Property funds, major asset acquisitions by the Holiday Accommodation Fund, a recap. of the Healthcare Real Estate Fund and privatisation of the Retail Property Fund and its subsequent establishment of the Property Income Fund.
Because they are dependent on the level of sale of assets and co-investments, Core Earnings are lumpy and we will only know the quality of the forecast
$10.0m of Core Earnings for the first half once the full set of financials is published.
But for context, the Core Earnings history (including H1, FY 2023) for the company is as follows:
View attachment 4935499Core Earnings are rather variable from one half to the next, but as can be seen, on an annual basis Core Earnings have been growing nicely since the stock IPO'd in late 2014.
As expected, Covid was a disruption to the earnings trajectory, and even though the current year probably still has a few legacy Covid drags, doubling the first-half result to $20m confirms the growth trend (excl. the Covid impact) at a CAGR of ~10%pa.
(Of course, there has been an issue of new equity over that period - ~$30m on two occasions - DH2016, and DH2019, which has the effect of reducing the growth rate of Core Earnings, on a per share basis - to around 5%pa; so not scintillating stuff, but still EPS growth in real terms and with 80% of earnings paid out to shareholders that's not an altogether poor financial pedigree.
I view my investment in ENN as a fixed income security with coupon indexed above CPI.
And with the current yield at around 8.5% (assuming 14.5cps full-year DPU), it is
effectively an inflation-beating fixed income security with starting yield more than twice as high as the 10-Year Bond.
Not a stock that will double in any given 2 or 3 year period (or even any 5 year period), but an attractive form of "ballast" for investors who desire more ballast in their portfolios.
Note: Given the varying degrees of co-investment in the various funds it manages, ENN's financial statements are complicated; the statutory accounts are struck on a fully consolidated basis, so management kindly provides equity accounted balance sheets as well as reconciliations to what it considers to be "core" earnings attributable to ENN shareholders, so the above exercise deals with these "Core" Earnings.
Of course, as has been mentioned, these Core Earnings include Profits on the sale of Assets and Co-Investments, which tend to be lumpy.
So I think that the more relevant metrics to keep track of over time - as the ultimate determinants of shareholder value creation - are the FUM and, related to that, the Funds Management Revenue.
On these scores, the performance has been seamless over time:
View attachment 4935635
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