Regal Asian Investments (ASX:RG8) posted a stellar FY26 with a net profit after tax of $124.8 million, driven by a 52.6% net portfolio return and a 10 cent fully franked final dividend, reflecting strong exposure to Asian semiconductors amid the AI boom.
- Net profit after tax surges to $124.8 million
- Portfolio return of 52.6% net of fees
- Final fully franked dividend increased to 10 cents per share
- Gross portfolio exposure reaches approximately 183%
- Continued on-market share buy-back with over 8 million shares repurchased
FY26 Profit and Dividend Upswing
Regal Asian Investments Limited (ASX:RG8) has reported a dramatic turnaround in its financial year ended 30 June 2026, posting a net profit after tax of $124.8 million, up from just $3.4 million the previous year. This leap was powered by a net portfolio return of 52.6%, reflecting the company’s concentrated bets on Asian growth sectors.
The Board declared a fully franked final dividend of 10 cents per share, lifting total dividends for FY26 to 18 cents per share, fully franked at a 30% tax rate. This represents a net yield of 6.6% on the 30 June 2026 share price of $2.74, with a grossed-up yield of 9.4% once franking credits are accounted for. The dividend is payable on 25 September 2026, with the Dividend Reinvestment Plan (DRP) active and expected to source shares on-market.
Portfolio Positioned for AI-Driven Growth
Regal’s investment portfolio was heavily weighted towards Information Technology, Materials, and Financials sectors, with a geographic focus on South Korea, Australia, Japan, and Taiwan. The portfolio’s gross exposure stood at approximately 183%; comprising 140% long and 44% short positions; with a net equity exposure of 96%. This positioning underscores Regal’s aggressive stance on Asian semiconductor companies, which were the largest contributors to performance.
Notable holdings included SK Hynix, Samsung Electronics, SK Square, and Taiwan Semiconductor Manufacturing Company (TSMC), all benefiting from the surging demand for advanced memory and logic chips driven by the artificial intelligence (AI) infrastructure buildout. The portfolio manager highlighted the multi-year AI investment cycle, supported by rising capital expenditure from hyperscalers and tight supply dynamics in memory, semiconductor manufacturing, and power infrastructure.
Gold and Banking Sectors Show Mixed Impact
While the gold mining exposure was a mild drag on returns due to a 25% drop in spot gold prices in the second half of FY26, the portfolio manager remains positive on gold equities for their leverage to recovering gold prices and potential M&A activity, citing two bidders competing for Vault Minerals, one of Regal’s holdings.
Short positions in the Australian banking sector also detracted slightly. Despite a deteriorating outlook marked by rising bad debts and falling mortgage demand, Australian banks defied expectations with strong performance driven by passive investment flows and a P/E premium well above historical averages. Regal continues to manage this short exposure cautiously, acknowledging valuation gaps can persist.
Capital Management and Share Buy-Backs
Regal continued its on-market share buy-back program, repurchasing over 8 million shares at a cost of $21.5 million in FY26. Since the program’s inception in May 2022, more than 80 million shares have been bought back and cancelled, reflecting the Board’s commitment to capital management as a driver of shareholder returns.
The share price discount to net tangible assets (NTA) remained around 17% at year-end but improved to 14% by 31 July 2026, coinciding with an increase in shareholder numbers. The Board remains optimistic that the improving track record will attract more demand and help narrow this discount over time.
Dividend Policy Shift and Outlook
In February 2026, Regal updated its dividend policy to focus on sustainable, fully franked semi-annual dividends linked more directly to portfolio performance and financial position, rather than targeting a fixed payout ratio. This flexibility was reflected in the increased final dividend following the strong investment returns.
Looking ahead, the company acknowledges the cyclical nature of semiconductor and memory industries and the risks posed by potential capacity expansions, slower hyperscaler spending, or weaker-than-expected AI investment returns. The Board also highlights risks inherent in Asian markets, including geopolitical, regulatory, and currency factors, alongside liquidity and leverage risks from short selling and derivatives.
The company will hold its Annual General Meeting in November 2026, providing shareholders an opportunity to engage with the Board. Meanwhile, Regal plans to maintain disciplined portfolio management, balancing valuation, position sizing, and diversification, and using market volatility to add selectively where risk-reward profiles are attractive.
Audit and Governance
The FY26 financial statements were audited by KPMG, who issued an unqualified opinion, confirming the fair valuation of Regal’s $587.6 million in financial assets and $201.9 million in financial liabilities at fair value through profit or loss. The Board comprises four independent directors with diverse expertise, and the company continues to benefit from strong governance practices aligned with ASX recommendations.
Bottom Line?
Regal’s FY26 surge underscores the rewards and risks of concentrated Asian tech exposure amid AI expansion, with dividend flexibility set to mirror portfolio swings.
Questions in the middle?
- How will Regal navigate the cyclical semiconductor industry if supply catches up with demand?
- Can the company’s dividend policy balance sustainability with investor expectations amid volatile markets?
- Will ongoing geopolitical and currency risks in Asia impact Regal’s portfolio resilience in FY27?