Wam Leaders (WLE) H1 2025 earnings summary

Executive summary

• Portfolio delivered a 3.3% return for the six months to December 31, 2024, supporting an increased fully franked interim dividend of 4.7 cps, representing a 7.4% annualized yield, well above the ASX 200 index yield.

• Operating profit before tax rose to $48.0M for H1 FY2025, up 184.7% year-over-year, with after-tax profit at $38.9M, and basic/diluted EPS at 2.86 cents.

• Since inception, annualized portfolio return is 12.2%, outperforming the S&P/ASX 200 Accumulation Index by 3.0% p.a.

• Portfolio positioning has shifted away from crowded momentum trades toward fundamentally undervalued stocks, with a focus on capital preservation and risk-adjusted returns.

• WAM Leaders acquired 100% of QV Equities via a Scheme of Arrangement, issuing 103.5M new shares (~$135.6M), increasing capital base and market relevance.

Financial highlights

• Operating profit after tax increased 131.9% to $38.9M compared to HY2024; net realised and unrealised gains on investments and FX: $28.5M.

• Cash and cash equivalents at period end: $59.9M, up from $15.8M at June 2024; net assets: $1.81B as at 31 Dec 2024.

• Profits reserve of 29.5 cps before interim dividend payment, with 3.1 years of dividend coverage.

• Average cash weighting: 2.4% of portfolio during the period; cash holdings are around 3%, consistent with historical average.

• 76.2 cps in dividends paid since inception, including franking credits.

Outlook and guidance

• Expectation of continued market volatility and further rotation from momentum to value, with fundamentals regaining importance.

• Overweight positions in resources, consumer staples, and communication services; underweight in banks due to valuation concerns.

• Anticipate one or two more RBA rate cuts in 2024, with the possibility of more if global growth deteriorates.

• Defensive sectors (healthcare, utilities, consumer staples) and resource companies are favored for the remainder of the year.

• Expectation of Chinese stimulus to boost demand for commodities and consumer products.