Underwood Capital Surges to $3.4m Profit, NTA Per Share Hits 10.9 Cents
Underwood Capital Limited has reported a strong half-year profit of $3.4 million, driven by gains in listed Australian securities and Weed Me Inc, lifting net tangible assets per share to 10.9 cents.
- Half-year profit rises to $3.4 million from $0.6 million
- Net tangible assets per share increase from 9.3 to 10.9 cents
- Investment gains primarily from listed ASX securities and Weed Me Inc
- Operating expenses rise due to higher asset management fees
- Company wound up sole subsidiary and extended on-market share buyback
Strong Profit Growth Amid Market Gains
Underwood Capital Limited (ASX: UWC), a specialist Australian investment company, has reported a significant increase in profit for the half-year ended 31 December 2025. The company posted a net profit after tax of $3.4 million, up from $0.6 million in the prior corresponding period. This surge was largely driven by positive market revaluations of its investments, particularly in listed Australian securities and its holding in Weed Me Inc.
Net Tangible Assets and Investment Performance
The net tangible asset backing per share (NTA) rose from 9.3 cents at 30 June 2025 to 10.9 cents at the end of December, reflecting the improved profitability. The company’s investment portfolio, managed by HD Capital Partners, focuses on listed and unlisted equities and debt securities, aiming for medium-term capital growth. The $16 million deployed into this strategy returned an impressive approximate annualised gain of 88% for the period, underscoring the effectiveness of its value-focused approach.
Rising Operating Costs and Management Fees
Operating expenses increased to $1.2 million from $0.4 million in the previous half-year, primarily due to higher asset management fees. These include both base fees and accrued performance fees, the latter reflecting the improved investment returns. A performance fee of $0.773 million was accrued as at 31 December 2025, with the final amount contingent on year-end net asset levels.
Corporate Actions and Capital Management
During the period, Underwood Capital voluntarily wound up its sole subsidiary, Phytotech Medical (UK) Pty Ltd, simplifying its corporate structure. The company also extended its on-market share buyback program, targeting up to 20.5 million ordinary shares (approximately 10% of issued capital) through to October 2026. This move aims to address the discount at which its shares trade relative to net asset value and reflects a proactive capital management stance.
Outlook and Risk Considerations
While the company remains focused on maximising investment value and maintaining a disciplined cost structure, it acknowledges risks including market volatility, currency fluctuations, and liquidity constraints, particularly relating to its Canadian cannabis investments. The board continues to monitor these risks closely through its risk management framework.
Bottom Line?
Underwood Capital’s robust half-year performance and strategic capital moves set the stage for investors to watch its next steps closely.
Questions in the middle?
- How will the accrued performance fee impact future profitability?
- What progress will Underwood Capital make on its on-market share buyback?
- How will market conditions affect the valuation of its unlisted investments, especially Weed Me Inc?
