AMCIL (ASX:AMH) management used its half-year results briefing to walk shareholders through a profit increase for the period, a steady interim dividend, and a challenging stretch for the portfolio amid sharp style and sector rotations in Australian equities.
Half-year financial snapshot: profit up, interim dividend unchanged
Chief Financial Officer Andrew Porter reported half-year profit of $4.1 million, which was higher than the prior corresponding period. Dividends were described as “generally flat,” with the board declaring an interim dividend of AUD 0.01 per share, unchanged from the previous year. Porter said the final dividend decision would incorporate the status of franking credits and any realized gains.
The company’s management expense ratio (MER) for the half was 0.43% (AUD 0.43 per AUD 100 invested). Porter cautioned the half-year MER can fluctuate, noting it was lower due to reduced costs from AICS related to “non-investing of incentives,” and said the company focuses more on full-year MER trends. The portfolio was cited at AUD 358 million.
NTA discount and buybacks
Porter also addressed the share price discount to net tangible assets (NTA), a recurring discussion point for listed investment companies (LICs). He said the discount was about 10% at the end of December 2025. He framed this as important for shareholders to understand the value they are buying relative to underlying assets.
Management said it has been conducting share buybacks over the past six months, in part to counter dilution from the dividend reinvestment plan (DRP) when the shares trade at a discount. Porter said the average buyback price was AUD 1.06 and that those shares had been issued at AUD 1.11.
In the Q&A, Porter said it was difficult to quantify whether the buyback reduced the discount, but emphasized the economic rationale of repurchasing shares below issue price. He also said AMCIL has a history of paying special dividends, including at the end of FY2024, and described special dividends as a method for distributing franking credits generated through realized gains.
Market backdrop and portfolio performance headwinds
Managing Director and portfolio manager Mark Freeman said geopolitical tensions, tariffs, and political uncertainty—particularly in the U.S.—were contributing to market volatility and sector dispersion. He also pointed to a pronounced rally in precious metals, calling recent gold price moves among the strongest gains in decades, and said investors were increasingly focused on how AI could affect technology and software stocks.
Freeman described valuations as “a bit full,” citing high long-term price-to-earnings (P/E) multiples and dividend yields near record lows in Australia, with similar conditions in the U.S. He noted the U.S. has shown stronger earnings-per-share growth and rising return on equity compared with Australia.
Turning to the portfolio, Freeman said the last year had been “very disappointing,” adding that AMCIL had not changed its style or process, but sector rotations moved against its positioning. He said the portfolio’s lack of exposure to major banks and gold had been a key contributor to underperformance over three years, as those areas of the market rallied.
Freeman highlighted that materials had risen sharply—he cited gains in mid- and small-cap resources of 70% to 100%—while healthcare and information technology, areas that include “structural compounders” favored by AMCIL, had lagged. He said quality compounding strategies had experienced “an absolute terrible year,” referencing Macquarie analysis showing quality compounders have outperformed over long periods but were among the worst-performing styles in the most recent calendar year, while loss-making companies (including many junior miners) performed strongly.
Stock-specific commentary: governance concerns, acquisitions, and cyclical pressures
Freeman addressed several holdings that had detracted from performance and reiterated AMCIL’s preference for “productive assets” and long-term compounding businesses.
- WiseTech Global: Freeman said the position had been reduced but maintained at a small size (about 1% of the portfolio). He cited governance and media issues as concerns and said AMCIL has provided feedback to the company. He also said the underlying product continues to grow and is becoming embedded with major logistics companies. Freeman noted an acquisition would slow earnings growth, prompting a reassessment of expected EPS growth and valuation multiples. He also addressed AI concerns, arguing WiseTech’s proprietary data and its own use of AI could strengthen its moat.
- Xero: Freeman said Xero has executed on plans and is investing to grow in the U.S., including via an acquisition to expand the product suite. He again noted market concerns about AI, but emphasized the “mission-critical” nature of the software and said the company is using AI to improve its competitive position. The holding was described as roughly 1% of the portfolio.
- Reece: Freeman said the company has been affected by a cyclical downturn in the U.S. housing market, which he described as being at a cyclical low point. He noted the company has been buying back shares.
- James Hardie: Freeman said a transaction was “disappointing” due to how it was structured, suggesting value shifted to the acquired company. However, he said the fiber cement business remains strategic, and the acquired business has a leadership position in decking. He said AMCIL has a smaller position and is not happy with the balance sheet, but expects it could improve if performance holds over the next couple of years.
- CSL: Freeman called CSL the “most disappointing,” saying AMCIL’s expectations were too optimistic. He said the market had shifted from expecting EPS growth in the teens to high single digits, leading to multiple de-rating. Freeman said the stock’s P/E has fallen to levels attracting “deep value” managers. In Q&A, he said the company still operates in complex, high-demand areas and has advantages in plasma collection. He also said CSL’s leadership has shifted since the Vifor acquisition, and management appears more focused on improving the core business and scaling back R&D ambitions.
- IDP Education: Freeman said IDP had been hit by government policy shifts taking the sector from “peak to trough,” but said it remains the leading player in a fragmented industry and that there were signs of improvement in Australia and the U.K. He called it a small position that AMCIL intends to hold.
Freeman also listed a range of holdings he still viewed as high-quality businesses whose share prices had fallen despite what he described as intact long-term theses, including Fisher & Paykel Healthcare, Goodman Group, REA Group, Auckland Airport, TechnologyOne, and CAR Group (carsales). He said AMCIL had not experienced “catastrophic failures,” characterizing much of the drawdown as valuation-driven.
Portfolio activity and positioning
Freeman said AMCIL exited small positions in NAB and Westpac, and also exited Equity Trustees. The company trimmed positions in Gentrack, Netwealth, Wesfarmers, Hub, and Goodman Group. Additions included building exposure to Woolworths around AUD 26–27, adding to Woodside for yield, and buying back some Gentrack after a pullback. Freeman said AMCIL initiated small positions in Nanosonics and PEXA, citing early success in the U.K. banking sector for PEXA.
Freeman said the portfolio had been more defensive 12 months earlier with higher cash, and acknowledged in hindsight gold would have been a better place for that capital. He said AMCIL is now putting cash to work selectively as quality stocks sell off, while remaining committed to its quality-compounder framework.
About AMCIL (ASX:AMH)
Amcil Limited is a publicly owned investment manager. The firm primarily manages separate client focused equity portfolios for its clients. It invests in the public equity markets of Australia. The firm invests in growth and value stocks of large cap and small cap companies to create its portfolios. Amcil Limited was founded in 1996 and is based in Melbourne, Australia.
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