Djerriwarrh Investments (DJW) H2 2024 earnings summary

Executive summary

• Focused on delivering enhanced, fully-franked income above the ASX 200 at low cost, with capital growth as a secondary objective; current yield is 6.5% on NTA and 7.4% on share price, both above the index yield of 4.7%.

• Net operating result rose 3% year-over-year to AUD 40.3 million, with net operating profit per share up 1% to AUD 0.1535; fully-franked dividends per share increased 2% to AUD 0.1525.

• Share price trades at a substantial discount to NTA (AUD 2.95 vs. AUD 3.36) as of 30 June 2024.

• Management rights are internally held, resulting in a low management expense ratio (MER) of 0.42%.

Financial highlights

• Net operating result (excluding open option positions) rose 3% year-over-year to AUD 40.3 million.

• Dividend and distribution income increased 2% to AUD 36.3 million; option income up 12% to AUD 16.6 million.

• Net operating profit per share up 1% to AUD 0.1535; total dividends declared up 2% to AUD 0.1525 per share.

• Portfolio dividend yield (including franking) was 6.5%, compared to the ASX 200 Index yield of 4.7%.

• NTA per share at 30 June 2024 was AUD 3.36; share price was AUD 2.95.

Outlook and guidance

• Portfolio positioned with a net cash ratio of 4%, providing flexibility to reinvest in high-yielding stocks as opportunities arise.

• Market viewed as moderately expensive; entering FY25 with net cash position and high call option coverage; cautious approach with selective reinvestment and active options management.

• Confident in long-term strategy to deliver enhanced yield and capital growth through a diversified, high-quality portfolio.

• Recent purchases in high-yield stocks expected to offset lower bank dividends.

• Options strategy provides flexibility to generate income while maintaining capital growth potential.