Todays half year result looks to be solid for SHL, with a healthy 8.4% YoY growth in revenue and operating leverage leading to a 17.0% growth in Net Profit and 15.5% growth in EPS. Debt is well within covenant and below historic ratios, even with the LADR acquisition due to occur 1 July it is expected to stay that way.

Organic growth of 6.1% and full year EBITDA guidance of A$1.7-1.75b is maintained, yet the market has currently knocked 3% off the share price. The market as a whole is down 1% which will be a factor, but it seems the market was looking for a better result and with a PE in the high 20’s having high expectations.

I bought a little under a year ago on what was 12 month lows with a thesis that the comparable out of COVID were driving the price down, but Sonic remained a high quality and growth company that was a leader, hence justified a high PE. I expected the market to take time to realise this and re-price accordingly, with a year set a minimum holding which would be towards the end of March.

The price had been trading around my buy price for the last 6 months and I have recently been looking at selling to fund what I see as better opportunities. I will continue to review commentary on the result, but my first impression is it was fine and holding until at least the 12 month target is justified, but would exit if the price lifted 10% from here, seeing that as a good price and better opportunities for further upside elsewhere.

Disc: I own RL