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Reporting Season: Ryder Capital delivers 70% growth

Published 09-AUG-2018 11:55 A.M.


2 minute read

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Name: Ryder Capital Ltd (ASX:RYD)

Market Capitalisation: $51 million

Last Closing Share Price: $1.24

Sydney-based Boutique Fund Manager, Ryder Capital Limited (ASX:RYD) has recorded after tax income of $10.8 million for the twelve months to 30 June 2018 — a 70.8% rise on the prior year.

Pre-tax net tangible assets (NTA) per share increased by 29.8% to $1.56 during the period, representing a premium to Wednesday’s closing price.

Strong investment performance drove growth in the company’s pre-tax net assets from $44.7 million to $62.9 million, an increase of circa 40%.

An on-market share buyback program at an average price of $1.15 contributed to the increase in NTA.

RYD declared a final 2.0 cent per share fully franked dividend.

Portfolio performs strongly

The group’s investment performance during fiscal 2018 was impressive with gross portfolio growth of 42.1%.

This was materially ahead of the company’s performance benchmark and more broadly, ahead of all ASX equity market indices gross returns.

On this note, RYD is a boutique fund manager pursuing a high conviction value driven investment strategy specialising in small to mid-cap Australasian equities.

The group’s approach is differentiated by investing for the medium to longer term, being aligned as significant shareholders in the company and being focused on generating strong absolute returns first and foremost.

A key foundation of its success to date has been to minimise mistakes, ignore the crowd and back their judgement.

As FinFeed discussed yesterday with Cadence Capital (ASX:CDM), smaller fund managers with the scope to invest outside the major indices sometimes benefit from being able to throw the net wider and include smaller and emerging stocks which can deliver both earnings and share price growth that exceeds that achieved by more mature companies.

Note that any decision with regards to adding this stock to your portfolio should be taken with caution and professional financial advice sought.

Ryder to increase cash weighting

However, in challenging market conditions such companies can be prone to more substantial share price deterioration, and on this note it was encouraging to hear RYD articulating its goal of increasing its cash weighting in the event that such conditions may emerge.

Not only does this provide some insulation in the case of a significant market downturn, but it also equips fund managers with a substantial bank to buy stocks at depressed prices when the time is right.

Cash holdings ended 30 June 2018 at 17.6% and are likely to increase as a result of capital inflows from the exercise of RYDO listed options which expire in December 2018.

Management is looking to increase its cash weighting to more than 20%.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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