Mirrabooka Investments reported a 63.6% jump in net profit to $13 million for FY26, boosted by higher investment income and dividends. However, its portfolio lagged the benchmark, dragged down by sector exposures and tech stock de-ratings.
- Net profit rises to $13 million, up 63.6%
- Total fully franked dividends increase to 14 cents per share
- Portfolio return of -10.8% underperforms benchmark's 7.8%
- Significant share buybacks planned for DRP/DSSP shares
- New investments include ASX and Web Travel Group
Profit Surge Masks Portfolio Challenges
Mirrabooka Investments (ASX:MIR) posted a robust net profit of $13.0 million for the year ended 30 June 2026, marking a 63.6% increase from $7.9 million the previous year. Earnings per share rose to 5.8 cents from 4.0 cents, driven by a 36.1% lift in operating revenue to $15.5 million. Despite this, the company’s investment portfolio delivered a disappointing -10.8% return over the period, significantly trailing the combined S&P/ASX Mid Cap 50 and Small Ordinaries benchmark which returned 7.8%, including franking.
Dividend Hike and Shareholder Returns
Mirrabooka declared a final fully franked dividend of 6.5 cents per share, unchanged from last year, alongside a special fully franked dividend of 3.0 cents per share. Together with the interim dividend of 4.5 cents, total dividends for FY26 rose to 14.0 cents per share, up from 11.0 cents the prior year. The entire final and special dividends are sourced from capital gains, with a Listed Investment Company (LIC) capital gain of 13.57 cents per share enabling some shareholders to claim tax deductions. The company offers Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) options at nil discount, and intends to buy back shares issued under these plans subject to market conditions, reflecting the current discount of Mirrabooka shares to net asset backing.
Portfolio Performance and Sector Impact
While Mirrabooka’s long-term track record remains strong with an 11.6% per annum return since inception in 1999, FY26 was one of its toughest years. The portfolio’s underperformance was largely due to minimal exposure to the resource sector, which soared as lithium, gold, copper, and uranium prices strengthened. Meanwhile, several technology and growth stocks faced sharp valuation de-ratings amid heightened disruption risks linked to AI investments by US tech giants. Notable holdings impacted include CAR Group, REA Group, SEEK, Vista Group International, and Life360.
Other headwinds included geopolitical tensions in the Middle East, inflationary pressures, and subdued consumer confidence in Australia, which weighed on cyclical stocks such as ARB Corporation and Temple & Webster Group. The company also exited disappointing positions in IDP Education and Corporate Travel following persistent sector challenges and accounting irregularities, respectively.
Strategic Portfolio Moves and Outlook
Mirrabooka made several significant portfolio adjustments during the year, including acquisitions of ASX:Web Travel Group, and Baby Bunting Group, aiming to capitalize on valuation opportunities amid market volatility. The sale of Lynas Rare Earths marked the exit from its sole mining holding following its inclusion in the ASX50 Leaders Index. The company also reduced stakes in Cobram Estate Olives and Peet as valuations stretched.
Looking ahead, Mirrabooka acknowledges ongoing market uncertainty but remains confident in its investment approach focused on businesses with durable competitive advantages and sustainable earnings growth. The company highlights its dividend yield of 6.4% (8.1% including the special dividend) as a key differentiator in the small and mid-cap space, noting that ordinary dividends have not been cut in 27 years.
Corporate Governance and Upcoming Events
Mirrabooka will host a shareholder webcast on 30 July 2026 to discuss the results and will hold its Annual General Meeting on 5 October 2026. The board continues to monitor market conditions closely, particularly the discount of the share price to net asset backing, and plans to execute share buybacks accordingly.
Bottom Line?
Mirrabooka’s strong profit and dividend growth contrast with a challenging portfolio year, underscoring the tension between long-term strategy and short-term market dynamics.
Questions in the middle?
- Will Mirrabooka’s share buybacks narrow the discount to net asset backing effectively?
- How will ongoing tech sector de-ratings affect Mirrabooka’s core holdings in FY27?
- Can recent portfolio acquisitions offset the drag from resource sector underexposure?