Regal’s $23.6M Loss Highlights Risks Amid Expanded Share Buy-Back Program

A Challenging Half-Year for Regal Asian Investments

Regal Asian Investments Limited (ASX: RG8) has disclosed a sharp reversal in financial performance for the half-year ended 31 December 2024, reporting an operating loss before tax of $23.6 million compared to a profit of $13.3 million in the prior corresponding period. This 278% decline reflects a difficult investment environment impacting the company’s concentrated portfolio focused on Asian equities.

The company’s investment portfolio returned -5.0% net of fees over the six months, a stark contrast to the 4.0% gain achieved in the same period last year. The portfolio remains highly leveraged, with 146% long exposure and 53% short positions, resulting in a net equity exposure of 93%. This aggressive positioning underscores the firm’s active management approach but also contributes to volatility in returns.

Dividend Policy Shift and Share Buy-Back Expansion

Despite the loss, Regal Asian Investments has declared a fully franked interim dividend of 6.0 cents per share, up from 5.0 cents previously, signaling confidence in its capital management strategy and ongoing cash flow generation. The dividend will be paid on 24 March 2025, with the Dividend Reinvestment Plan (DRP) remaining in place to allow shareholders to reinvest dividends into new shares.

In a notable development, the company secured shareholder approval at its November 2024 AGM to expand its on-market share buy-back program, authorizing the repurchase of up to approximately 25% of issued shares over the next 12 months. This move aims to enhance shareholder value through capital management amid a challenging market backdrop.

Balance Sheet and Operational Highlights

Regal’s net assets declined to $370.1 million as at 31 December 2024 from $426.2 million six months earlier, reflecting the investment losses and ongoing buy-back activity. Post-tax net tangible assets (NTA) per share stood at $2.33, slightly down from $2.49 at the previous half-year, after accounting for dividends paid.

The company continues to benefit from strong alignment with its Investment Manager, Regal Partners Limited, which covered over $220,000 of operating expenses during the period, including regulatory fees and audit costs. Additionally, the auditor transitioned from Pitcher Partners to KPMG following shareholder approval, with KPMG issuing an unqualified review report.

Looking Ahead

Post-period, Regal Asian Investments reported a rebound with a 10.9% portfolio return in January 2025, suggesting potential recovery momentum. The updated dividend policy targeting a minimum 6.0 cents per share every six months also reflects a commitment to delivering consistent shareholder returns despite recent setbacks.

However, the significant loss and portfolio volatility highlight the risks inherent in the company’s concentrated and leveraged investment approach. Investors will be watching closely to see if the firm can sustain performance improvements and effectively deploy its expanded buy-back capacity to support share price and capital structure.