Kalkine has a fully transformed New Avatar.
Company Overview: 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. CHC is engaged in accessing equity from listed, wholesale and retail investors and then creating value through attractive investment opportunities. The company was listed on ASX on 10 June 2005.
CHC Details
This report is an updated version of the report published on 07 June 2022 at 3:51 PM GMT.
CHC Rides on Acquisitions and Partnership Agreements:
Operating Earnings Highlight; Analysis by Kalkine Group
A Quick Glimpse at 1HFY22 Key Highlights:
Financial Highlight; Analysis by Kalkine Group
Key Metrics: The company reported a ROE of 19.5% in 1HFY22, compared to the industry median of 5.8%. The company's EBITDA margin in 1HFY22, stood at 49.9% compared to 40.2% reported in the year-ago period.
Profitability Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 34.66% of the total shareholding, while the top 4 constitute the maximum holding. Colonial First State Investments Limited and Vanguard Investments Australia Ltd. are holding a maximum stake in the company at 6.88% and 5.73%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Risk Analysis:
Outlook: The company remains well-placed for the future, backed by a high-quality team focused on delivering results for its security holders and capital partners, placing it well for resilient performance. The company currently has a balance sheet liquidity of $6.7 billion and weighted average gearing across the funds of 28%, thus maintaining financial flexibility and substantial funding capacity across the fund’s platform, this aiding CHC in carrying out its key development activities. For FY22, the company expects post-tax operating earnings per security to be a minimum of 112 cents per security. It remains on track to develop a strong product pipeline and retain earnings, thus offering valuable opportunities to deploy its investment capacity into a new product. To conclude, CHC witnessed decent prospects to grow the PIM partnership by exploiting its large retail investor community and robust wholesale investor relationships.
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: The company’s stock went down by ~34.18% in the past six months. Currently, the stock is trading close to its 52-weeks; low level of $12.53. The stock has been valued using the P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount compared to its peers, considering the interest rate risk, refinancing risk, portfolio concentration risks, COVID-19 led uncertainties, etc. For the purpose of valuation, peers such as Goodman Group (ASX: GMG), GPT Group (ASX: GPT), Vicinity Centres (ASX: VCX), and others have been considered. Considering the above-mentioned factors, robust cash flows, growing development pipeline, earnings resilience, diversification of the Property Investment portfolio, positive long-term outlook, indicative upside in valuation, and current trading level, we recommend a ‘Buy’ rating on the stock at the current market price of $12.59, as on 7 June 2022, 3:30 PM (GMT+10), Sydney, Eastern Australia.
Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
CHC Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.
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.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.