Reporting Season: Ryder Capital delivers 70% growth

By Trevor Hoey. Published at Aug 9, 2018, in Features

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%.

S3 Consortium Pty Ltd (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 only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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