This report is an updated version of the report published on 10th May 2022 at 2:49 PM (GMT +10)
Charter Hall Group
CHC Details
Charter Hall Group (ASX: CHC) is one of Australia's leading fully integrated property groups with over 30 years of experience in property investment and funds management.
Result Performance for the Half-Year Ended 31 December 2021 – H1FY22
- The operating earnings stood at $263.9 million, or OEPS post-tax of 56.6cps and statutory profit of $517.8 million, after-tax attributable to stapled security holders.
- The property investment portfolio increased by $432 million, or 18%, during H1FY22 to $2.85 billion and earned a 25.5% total property investment return.
- Portfolio occupancy stayed solid at 97.4%, and the Weighted Average Lease Expiry (WALE) reported at 8.6 years.
- The managed funds increased from $27.2 billion to $79.5 billion, or 52% growth in H1FY22, driven by Property FUM growth of $9 billion or 17.2%.
Source: Company Reports, Analysis by Kalkine Group
Outlook
The company continues to witness a strong pathway of growth for the group driven by the investment capacity of $6.7 billion across the platform, the sustained robust demand from capital partners to deploy equity, a growing development pipeline and significant retained earnings. The company witnessed decent prospects to grow the PIM partnership by exploiting its large retail investor community and its wholesale solid investor relationships. Notable, the company has guided to achieve post-tax operating earnings per security of at least 112 cents in FY22. Further, its FY22 distribution per security guidance remains unchanged at 6% growth over FY21.
Key Risks
Material business risks faced by the property investment portfolio, which would impact the financial performance of the Group, include interest rate risk, refinancing risk, lease defaults or extended vacancies, portfolio concentration risks, and development risk, among others.
Valuation Methodology: Price/EPS Based Relative Valuation (Illustrative)
Technical Overview:
Daily Price Chart
Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)
Stock Recommendation
The stock is trading below the average of the 52-week high price of $22.18 and the 52-week low price of $13.20.
The stock has been valued using P/E multiple based relative valuation (on an illustrative basis), and the target price so arrived reflects a rise of low double-digit (in % terms). In addition, a slight premium has been applied to peer average P/E multiple (NTM basis), considering growing development pipeline, earnings resilience, and diversification of the Property Investment portfolio.
Considering the factors above, we give a “Buy” recommendation on the stock at the current market price of $12.94 per share as of 10th May 2022 (Time: 10:40 AM (GMT+10), Sydney, Australia).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Charter Hall Group (CHC) is a part of Kalkine’s Global Real Estate Product
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
Technical Indicators Defined:-
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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