Soul Patts Share Price: FY21 Profit Set to Nearly Double (ASX:SOL)

The Washington H Soul Pattinson and Co Ltd [ASX:SOL] expects NPAT to jump from $170 million in FY20 to $316–336 million in FY21. The news wasn’t enough to send SOL share price higher, with Soul Patts currently down 2% to $35.24 per share.
ASX SOL - Soul Patts Share Price Chart Source: Tradingview.com

 SOL shares have gained 70% over the last 12 months.

SOL updates FY21 regular NPAT

WHSP believes that the key drivers of success for its business is the capital growth of the portfolio and a consistently growing yield.

With this in mind, the company notes that there are plenty of factors that will materially impact the consolidated regular NPAT in FY21.

 As a result of thermal coal prices being at a 10-year high, portfolio constituent New Hope disclosed in its latest quarterly report that EBITDA is expected to stand at $372 million in FY21.

The result is unaudited and New Hope’s full-year result is expected to come out on 21 September 2021 and will have a direct impact on WHSP.

 Brickworks, another company in WHSP’s portfolio, posted a trading update on 9 June 2021.

Brickworks highlighted that due to rising real estate prices, it expects ‘record earnings’ from its property division.

The company will release its full-year results on 23 September 2021.

Round Oak, a base metal mining company, is a wholly-owned subsidiary of WHSP.

Round Oak is predicted to deliver a Regular NPAT of $64–68 million in FY21, a significant improvement from the $43 million loss in FY20.

The profit will be driven by improved zinc and copper prices, with the company moving from the development to production phase at a number of its mines.

 SOL’s net profit is tied to the performance of these companies and SOL expects to post a consolidated regular NPAT of $316–336 million in FY21.

This is an increase from $170 million in FY20.

However, despite the increased earnings by New Hope, Brickworks, and Round Oak, WHSP expects reduced contributions from TPG Telecom.

SOL share price outlook

 A potential reason for today’s drop could be SOL’s update on statutory profit.

SOL’s FY20 statutory profit included a one-off accounting gain of $1.05 billion from the derecognition of TPG as an equity accounted associate.

This won’t be repeated in FY21 and the company said its statutory profit will be materially lower.

 Now, dividends are likely a big attraction for investors interested in SOL.

So if you are looking for consistent dividend stocks, I suggest checking out the latest dividend stocks report from our own Editorial Director Greg Canavan.

 

Regards,

 

Kiryll Prakapenka,

For The Rum Rebellion  

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.

The Rum Rebellion