Ryder Capital Posts 15.8% NTA Return, Boosts Interim Dividend 12.5%
Ryder Capital Limited has reported a striking 312% increase in total comprehensive income for the half-year ended December 31, 2024, alongside a 12.5% hike in its fully franked interim dividend, underscoring robust portfolio performance amid market uncertainties.
- Total comprehensive income soared 312% to $13.02 million
- Net profit after tax rose 50% to $1.23 million
- Interim dividend increased 12.5% to 4.5 cents per share, fully franked
- Pre-tax net tangible assets per share climbed to 154.46 cents
- Portfolio outperformed benchmark with a 15.84% pre-tax NTA return
Strong Financial Performance Amid Market Challenges
Ryder Capital Limited has delivered an impressive half-year financial report for the period ending 31 December 2024, showcasing significant growth across key metrics. The company’s total comprehensive income attributable to members surged by 312% to $13.02 million, a figure that includes both realised and unrealised gains within its investment portfolio. This marks a substantial leap from the $3.2 million recorded in the same period last year.
Net profit after tax also rose robustly by 50% to $1.23 million, reflecting the company’s effective investment strategy focused on ASX-listed micro to small capitalisation equities, bonds, and cash. This performance was achieved despite a more cautious market environment, with Ryder maintaining a defensive posture by holding higher cash levels.
Dividend Growth Reflects Confidence
In line with its commitment to delivering shareholder value, Ryder Capital announced a 12.5% increase in its interim dividend to 4.5 cents per share, fully franked at a 25% tax rate. The dividend is payable on 19 March 2025, with an ex-dividend date of 24 February 2025. This increase continues the company’s track record of steady dividend growth, supported by a strengthened distributable profits reserve, which rose 41.6% to $36 million during the period.
The company also introduced a Dividend Reinvestment Plan (DRP) without a discount, allowing shareholders to reinvest dividends into additional shares, further aligning investor interests with the company’s growth trajectory.
Robust Portfolio Performance and Asset Growth
Ryder’s portfolio delivered a pre-tax undiluted net tangible assets (NTA) return of 15.84%, significantly outperforming its benchmark of the RBA cash rate plus 4.25%. This strong performance was driven by high conviction investments in value-oriented small and micro-cap stocks, with top contributors including SRG Global Ltd and Macmahon Holdings Ltd.
Net tangible assets per share increased to 154.46 cents before tax, up from 118.96 cents a year earlier, reflecting both capital appreciation and active portfolio management. The company’s cautious approach is evident in its average cash holding of 9.08%, positioning it well to navigate ongoing market volatility.
Capital Management and Share Buy-Back
Ryder continued its on-market share buy-back program, purchasing 1.1 million shares at an average price of $1.23 per share, reducing issued capital to 81.5 million shares. The board remains focused on balancing capital returns with investment opportunities to enhance NTA growth.
Operating expenses rose by approximately 21%, primarily due to higher management fees linked to increased net assets. Despite this, the company maintains a negative performance fee accrual, indicating that the investment manager has yet to surpass cumulative performance hurdles to trigger fee payments.
Outlook Amid Uncertainty
Looking ahead, Ryder acknowledges an increasingly uncertain equity market environment, influenced by fluctuating interest rate expectations and geopolitical risks. The company plans to maintain a defensive portfolio stance, focusing on value stocks with strong cash flow, conservative balance sheets, and reliable dividend payments.
This cautious yet opportunistic approach aims to preserve capital while positioning Ryder to capitalize on market dislocations, continuing its pursuit of long-term capital growth exceeding its benchmark.
Bottom Line?
Ryder Capital’s strong half-year results and dividend increase signal resilience, but market volatility demands vigilant portfolio management ahead.
Questions in the middle?
- How will rising corporate tax rates impact Ryder’s future dividend franking and payout levels?
- What sectors or stocks is Ryder targeting to sustain its outperformance amid a defensive posture?
- Could the ongoing negative performance fee accrual affect the investment manager’s incentives and strategy?
