Media Release - Half-year report to 31 December 2023
Released
Released
Announcement PDF
5 February 2024
ASX / Media Release
Argo maintains record high fully franked interim dividend
Argo Investments Limited (ASX code: ARG), one of Australia’s oldest and largest listed
investment companies, announces a half-year profit of $125.3 million and a fully franked
interim dividend of 16.5 cents per share.
Half-year to
31 December 2023
Half-year to
31 December 2022
Change
$125.3 million
$137.0 million
-8.5%
Earnings per share
16.5 cents
18.2 cents
-9.3%
Interim dividend per share (fully franked)
16.5 cents
16.5 cents
unchanged
0.15%
0.16%
-0.01%
Summary of financial results
Profit
Management Expense Ratio
Investment income received from companies in the investment portfolio declined,
particularly dividends from mining companies BHP and Rio Tinto due to softer commodity
prices. Income generated from option writing and trading activities was also lower
compared to the previous corresponding period.
Investment performance
Argo’s investment performance, as measured by net tangible assets (NTA) return after
management costs and adjusted for company tax paid, was +5.6% as compared to the
S&P/ASX 200 Accumulation Index return of +7.6% over the six months to 31 December
2023 (without any allowance for costs).
Holdings in Clarity Pharmaceuticals (up more than +170%) and Stanmore Resources (up
nearly +60%) contributed positively to performance. However, gains were offset by
negative returns from other holdings, including pathology and imaging provider Healius.
In general, Australian healthcare providers have lagged due to higher costs and lower
utilisation levels. Not owning Fortescue materially weighed on relative performance, as
did our underweight exposure to the major banks.
Argo Investments Limited
ACN 007 519 520
invest@argoinvestments.com.au
argoinvestments.com.au
Head Office
Level 25, 91 King William St
Adelaide SA 5000
08 8210 9500
Sydney Office
Level 37, 259 George St
Sydney NSW 2000
02 8274 4700w
The share price performance was +5.4%, with Argo shares now trading at a slight
discount to their NTA backing. Sharply higher returns from term deposits have
decreased the comparative appeal of many equity investments, including listed
investment companies (LICs). We expect this trend to reverse as the monetary policy
cycle continues and interest rates fall.
Investment portfolio
The larger movements in the portfolio during the period were:
Purchases
Resmed*
CSL
Santos
Stanmore Resources
Viva Energy Group
Woodside Energy Group
Sales
Estia Health (takeover)**
Invocare (takeover)**
Liontown Resources**
Insurance Australia Group**
* New portfolio position
** Fully exited position
The total number of stocks in the investment portfolio decreased slightly, from 89 to 86.
Outlook
As fears of a recession fade and expectations of official interest rate cuts build, equity
markets globally have staged a remarkable rally over recent months. This bullish
sentiment has seen investors largely overlook consensus expectations of lower
company earnings for the remainder of 2024 and cast aside concerns about slowing
growth and/or a monetary policy misstep.
Looking ahead, an obvious risk for Australia’s share market is the possibility that central
banks do not cut official rates as soon or as sharply as predicted. Geopolitical factors
will also be at the forefront of investors’ minds amid ongoing conflicts in the Middle East
and Europe, as well as potential upheaval from various looming national elections, most
notably in the US.
As always, Australia’s fiscal fortunes are linked to China’s economy which remains
challenged by falling property prices, weak consumption and deflation. Despite these
sombre signs, China’s economic woes have not weighed on the iron ore price and some
analysts are predicting a stimulatory policy response from the Chinese government.
Overall, Australia’s economic fundamentals remain solid with the outlook underpinned
by strong employment and moderating inflation. This broadly positive economic picture
belies the impact that price increases and higher mortgage repayments are having on
many consumers. As a result, we anticipate a significant dispersion in profit results this
corporate reporting season, which underscores the benefit of Argo’s highly diversified
portfolio. With a strong balance sheet, no debt and cash on hand, Argo is well positioned
as we enter the new calendar year.
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argoinvestments.com.au | 2
Contacts
Jason Beddow
Managing Director
02 8274 4702
Meredith Hemsley
Communications Manager
02 8274 4707
About Argo
Argo Investments (ASX code: ARG) is one of Australia’s oldest and largest listed
investment companies (LICs). We offer investors low-cost, conservative and diversified
exposure to approximately 85 companies listed on the ASX.
Founded in Adelaide in 1946, Argo is one of the ASX’s top 100 companies and invests
more than $7 billion on behalf of approximately 95,000 shareholders.
argoinvestments.com.au | 3
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