Perpetual Earnings: Margin Stabilization in Sight After Years of Decline

Narrow-moat Perpetual’s first-half fiscal 2024 net profit after tax of AUD 98 million fell short of our forecast despite being up 46% from the previous corresponding period with the inclusion of Pendal. EBITDA of AUD 206 million slightly exceeded our expectations due to effective cost containment, but higher depreciation/amortization, share-based payments, and interest costs dampened overall earnings. Regardless, we maintain our confidence in the core business' ability to deliver maintainable earnings growth and stabilize margins. This will be supported by recovering fund flows from market disruptions in 2022-23 and realizing cost synergies that are also currently ahead of schedule.