The Soul Patts (ASX:SOL) share price is down 3% on Friday

The Soul Patts share price is falling today. It’s down 3% right now.

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The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), AKA Soul Patts, share price is currently down more than 3% today.

That means it has declined by around 9% since Tuesday. The S&P/ASX 200 Index (ASX: XJO) has only fallen around 1% in that same time period.

As an investment conglomerate, the underlying portfolio value of Soul Patts can be influenced by the changing values of its investments.

Looking at some its biggest investments today, there are declines across the board.

The TPG Telecom Ltd (ASX: TPG) share price is down 0.2%, the Brickworks Limited (ASX: BKW) share price is down 2% and the New Hope Corporation Limited (ASX: NHC) share price has fallen 2.2%.

What else could be influencing the Soul Patts share price this week?

One of the other larger investments in the Soul Patts portfolio is a holding of Australian Pharmaceutical Industries Ltd (ASX: API) shares.

API featured in the news this week after receiving a bigger takeover bid from Wesfarmers Ltd (ASX: WES) which, at this stage, it intends to accept. The revised offer is $1.55 per share, a 37% premium to API’s one-month volume weighted average price $1.133 per share to 9 July 2021, prior to the initial offer by Wesfarmers.

Soul Patts has agreed to vote its 19.3% shareholding in API in favour of Wesfarmers’ revised proposal. The investment conglomerate has also granted a call option for its API shares in favour of Wesfarmers.

FY21 profit update

The Soul Patts share price is now essentially back to where it was on 6 September 2021. What’s special about that date? It’s when the ASX 200 company announced an update regarding its FY21 regular profit.

Within that, there were three mentions of profit growth and one detractor.

First, Soul Patts referenced that New Hope disclosed in its latest quarterly report that the miner expects to make earnings before interest, tax, depreciation and amortisation (EBITDA) of $372 million for FY21, primarily as a result of thermal coal prices currently being at a 10-year high.

Second, Brickworks is expecting to report record earnings from its property division, driven by the value of its property trust.

Finally, Round Oak, a wholly owned mining business, is expected to report a regular net profit for FY21 of between $64 million to $68 million. Management described this expected result as a significant improvement on the FY20 net loss of $43 million. There were two factors for this turnaround. One, commodity prices (mostly zinc and copper) have improved. Second, the company moved from development into production at a number of its mines.

Soul Patts is expecting FY21 regular net profit to be in the range of $316 million to $336 million, up from $170 million in FY20.

However, TPG will provide a reduced contribution after the merger between TPG and Vodafone in July 2020. The investment conglomerate will no longer equity account for its share of TPG’s net profit. Soul Patts also noted it only received one dividend from TPG in FY21, amounting to $18 million (compared to the equity accounted profit of $72 million in FY20).

Soul Patts dividend yield snapshot

At the current Soul Patts share price, it currently has a grossed-up dividend yield of 2.4%.

Should you invest $1,000 in Soul Patts right now?

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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