Washington H. Soul Pattinson & Company Limited

Section1: Company Overview and Fundamental Insights

1.1 Company Overview:

Washington H. Soul Pattinson & Company Limited (ASX: SOL) invests in diversified asset classes and investments and delivers steady shareholder returns. SOL’s business segments include: a strategic portfolio, Emerging companies’ portfolio, a private equity portfolio, large caps portfolio, structured yield portfolio, property portfolio.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders collectively form ~38.68% of the total shareholdings. Brickworks Ltd holds the maximum number of shares with ~26.13% shareholding, followed by J S Millner Holdings Pty. Ltd. with ~2.75%, as depicted in the chart below: 

1.4 Key Metrics:

The company’s Gross margin rose from 31.8% in 1HFY21 to 54.3% in 1HFY22 and stood the highest in terms of half yearly performance since 1HFY19. Current ratio of 3.46x in H1FY22 stood higher than the industry median of 1.52x.  

Section 2:  Business Updates and Financial Highlights

2.1 Recent Developments: The below table summarises the recent material updates:

2.2 Key Takeaways from Recent Results:

Section 3:  Key Risks and Outlook

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.

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