Perpetual (ASX:PPT) share price withstands worst of sell-off after profit doubles

How did ASX investors respond to the company's half-year report today?

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Key points

  • Perpetual released its half-year results today 
  • Net profit after tax surges 113% 
  • 33% dividend increase to $1.12 per share 

The Perpetual Limited (ASX: PPT) share price was in the green by 2% this morning after the company released its half-year results. The share price hit an intraday high of $36.66 within the first hour of trading.

However, Perpetual couldn't escape this afternoon's broader market sell-off as tensions between Russia and Ukraine escalated.

Perpetual shares finished the session at $35.52 apiece, down 1.2%. By comparison, the S&P/ASX 200 Index (ASX: XJO) took a greater hit, finishing 3% down at 6,990 points.

Let's take a look at what the wealth management company reported today.

Perpetual share price responds to NPAT doubling

Highlights of the company's half-year (H1 FY22) results include:

  • Net profit after tax (NPAT) of $59.3 million, a 113% improvement on the prior corresponding period (pcp)
  • Fully franked dividend of $1.12 per share, a 33% boost on pcp
  • Underlying profit after tax up 54% on pcp to $79.1 million
  • Underlying profit before tax up 56% on pcp to $109.6 million
  • Operating revenue up 37% on pcp to $384.9 million.

What else happened in the half?

Strong earnings growth across all four of the company's divisions underpinned its profit boost and revenue gains.

Perpetual Asset Management International achieved a 205% surge in underlying profit before tax (UPBT) on the pcp. Assets under management surged 16% on H1 FY21 to $77.2 billion. The Trillium and Barrow Hanley acquisitions contributed to this growth.

Meanwhile, UPBT in Perpetual's Australian asset management division surged 42% on H1 FY21, underpinned by "strong relative investment performance, positive net flows, higher average equity markets and lower variable remuneration". Assets under management in this division jumped from $22.7 billion to $25.6 billion.

Further, the Perpetual Corporate Trust Division achieved a 19% higher UPBT, driven by continued growth across its three business units. Funds under administration surged 6% on the pcp to $990.4 billion. Perpetual acquired Laminar Capital and incorporated it into a new digital division.

Meanwhile, Perpetual Private UPBT surged 56% on the pcp due to positive net flows, strong investment performance, and higher market and non-market revenue. Perpetual also completed its acquisition of Jacaranda Financial Planning during the half.

Perpetual has offices in Australia, the United States, the United Kingdom, the Netherlands, and Singapore, as well as a presence in Hong Kong.

Management commentary

Commenting on the results, CEO and managing director Rob Adams said:

We are delivering solid earnings growth across our business, with all four of our operating divisions demonstrating positive momentum.

Our diversified business model has gone from strength to strength, generating both reliable and growing returns while also providing Perpetual with a clear point of differentiation in the market.

What's next for Perpetual?

Perpetual confirmed its FY22 operating expense growth guidance of 18% to 22%. The company is seeing positive momentum in all of its divisions going into the second half and is confident of continuing to scale globally.

The company believes it is in a good position to deliver organic growth due to its sound balance sheet and headway on its global distribution strategy.

Speaking on the outlook, Adams added:

Current and expected market conditions appear likely to suit the value style investment approaches of Perpetual's Australian Equities team and the teams at Barrow Hanley, both having delivered strong results for investors over many decades.

Our positioning in ESG investment is delivering results and investor interest is high, as evidenced by Trillium's strong growth. PCT goes from strength to strength across all its business lines, and PP's long run of positive net flows is set to continue.

Perpetual will pay an interim dividend of $1.12 per share on 1 April.

Perpetual share price summary

The Perpetual share price has soared by about 12% in the past 12 months. For perspective, the benchmark ASX 200 has returned about 2% over the past year.

Perpetual has a market capitalisation of about $2 billion.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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