I would now like to hand the presentations over to Mr. Mark Freeman, Managing Director of AMCIL. Thank you. Please go ahead.
Thank you, and good afternoon, everyone, and welcome to this half-year result briefing. I'd like to begin by acknowledging the traditional owners and custodians from the lands we are gathered on today, and pay my respects to their leaders, past, present, and emerging. Joining me today on this webinar are Jaye Guy and Gilbert Battistella, who are investment analysts who work on the portfolio. Andrew Porter, our CFO, Matthew Rowe, our Company Secretary, and Geoff Driver, our General Manager of Business Development. Before we start the presentation, just a bit of housekeeping on this webinar.
This briefing is based on the material available on the company's website. If you are using your computer to access the presentation via the webcast, the slides will change automatically. Finally, please note, following the presentation, there will be time for questions and answers. You can ask a question via the webcast using the tab at the bottom of the screen. So we'll start the presentation, and on slide two, just a disclaimer to say we're here to talk about what we're doing in the company. We're not giving any advice as such. So let's start with the results. On slide four, I'll pass over to Andrew Porter, our CFO.
Thank you, Mark, and good afternoon, ladies and gentlemen. So profit for the half-year, AUD 3.6 million. That was down from AUD 4.1 million. The dividends and interest the portfolio received was actually up, but the trading and options income was down, so that caused the fall that you can see there to AUD 3.6 million from AUD 4.1 million. Notwithstanding that, the interim dividend was maintained at 1 cent. Management expense ratio, 0.53%, up from 0.46% in 2023, so that's AUD 0.53 for every AUD 100. We foreshadowed that at the AGM. We said that costs were likely to rise due to a lower refund from AFIC, and that is largely what has eventuated. The portfolio, AUD 423 million, up from AUD 370 million in the previous year, and we'll get on to some performance figures later on.
The next slide shows something that I imagine most shareholders are aware of, that we are trading at a significant discount to the NTA. At the end of December, the NTA was AUD 1.33, and the share price was AUD 1.17. So there are discounts around most of the LICs in the industry at the moment. We believe that's for a number of reasons. Interest rates have meant that people go back to fixed interest, so we see some asset allocators saying you need to get out of equities where people had been to get any sort of yield and go back into fixed interest for risk allocation.
I think there's also been a move where people are going offshore and moving more to the U.S. shares, so they take money out of Australian equities and move that offshore. There are obviously ETFs around. I do think people sometimes are unaware, perhaps, of some of the pitfalls around ETFs, and perhaps we can talk about that in the future. The AMCIL does normally trade at a smallish discount, and you can see that on the graph there.
We think that's probably down to what has been historically a lack of liquidity, and if you see 2021-2022, it was trading at a premium, and a lot of the LICs that you see, AFIC, for instance, was trading at a much larger premium in that period, so that's come out, and AMCIL suffers from that, but all I can tell shareholders is that the board and management are very aware of that. There's a lot of marketing going on to planners and to brokers pointing out the benefits of an LIC, what investing in them can do, and whether now is a good time to be investing in LICs or not. So we are conscious of that, as I said, and looking to close that gap. With that, I'll hand back to Mark.
Okay, thanks, Andrew. And we'll move on to slide seven, I think it is. Really just looking at the performance, so you can see six months we outperformed the benchmark, and importantly, one, five, ten years we're ahead of the benchmark on a grossed-up basis, so we grossed up the index for franking. We do the same for our portfolio, but we've only done it for our portfolio to the extent that we've actually paid out franking. We still have franking sitting in the company. And so essentially the numbers for AMCIL, these are slightly understated because if we were to pay out that excess franking, those performance numbers would go up. So we move to the next slide, just talking about a couple of benefits of AMCIL. It is a more focused portfolio. We are focused very much on quality companies.
We're not driven by the index in our weighting sizes. There is alignment of interest in the sense that there's strong equity ownership by directors and staff in AMCIL. There's no performance fees, and it's a relatively low expense ratio compared to other managed funds in the market. We want to be tax-effective, so we are trying to keep the turnover low and take a longer-term investment approach. So if you focus a bit more on the investment approach, we consistently put up this slide to remind everyone what we're trying to do.
We're trying to stay with the better quality companies in the market, so that's companies that have unique assets that are very hard to replicate, or another way to phrase it is companies that are establishing a leadership position in the markets in which they operate, and ones where we think their competitive advantage is sustainable over time. We're wary of companies that have external risk factors. Balance sheets are really important. We're wary of companies that carry too much debt. Debt always gets companies into trouble. We prefer companies with more consistent earnings streams, and the people are really important, so we're looking for effective, passionate management teams, strong ownership alignment. These are all really important part of our process.
These factors are there for a reason because what we've seen over time is that when you have these characteristics of a company coming together, it means that we're going to be investing in a company that has better competitive advantage. This leads to higher return on capital, so we see that with the stocks we invest in. They generally have much higher return on capital than the market. When you have high returns, you generate good cash, which means you can reinvest in the business, continue to capture market share, enhance your leadership position, and then ultimately drive profit growth. And this is the thing ultimately that drives share prices and dividends: it's profit growth, which gives long-term returns to shareholders. So we're out there seeking to buy these companies when we identify long-term value, and we will reduce or exit when companies don't meet these characteristics.
But essentially, the most important part of investing is not just to identify these, but it's to identify early and be willing to take a position. That's critical to outperforming benchmarks. And so we're in the market every day hunting for opportunities and trying to be early to those opportunities and get them into the portfolio. So if you move to the next slide, so if you look at some of that activity over the half-year, we have exited CBA. We think CBA is a fantastic business, but we're really struggling with the share price as it is at the moment, and we actually sold at prices slightly lower than it is now. It's on a P/E of about 26 x and a yield which is nearly under 3%. And even though it's a great company, we just can't justify that sort of extreme valuation, so we exited CBA.
We did have some mining resources, and when the issues came out about the CEO, we got out pretty much straight away. We don't want to be in companies where management has those sort of issues hanging over it. We've exited PEXA. It does have a strong position in the Australian market, but where it trades, I guess we're hoping more will come out of the U.K., but I think the key word is hope, and we don't want to be investing on hope. We want to be investing on observation, and we just couldn't observe the kind of outcomes that we'd like to see to indicate the U.K. might be successful. Domino's has also had its issues. It's more about where that business sits. It has also taken on a bit of debt over the last few years, and it's struggling a bit, so we got out of that.
PSC was a smaller position, but that was an owner-driver stock. That was a takeover, so it proved to be a successful investment for us. If you probably remember, we went into PWR. It wasn't that long ago, but we were really concerned that they might struggle for a couple of years. They are investing a lot of money, expanding their business and operational footprint in Australia, but particularly in the U.S. We thought the stock was quite expensive, so we sort of stepped away from our small holding we had, but we're still watching that pretty closely because this company still has a lot of the characteristics we look for.
But we'd just like to see, I guess, what we call more turning points to see that once they get past this CapEx heavy phase, if we get convinced that the U.S. is going to produce the sort of growth the company hopes, we'd certainly look to get back in again. And we have trimmed some other positions that we thought were reaching full valuation, such as Wesfarmers is on record high P/Es. Westpac as well. Goodman is a big stock, but we've taken a bit off the top, likewise with Netwealth, Breville, REA and Reece. We've still got strong holdings on those, but we've just taken a bit off the top. And on the flip side, we added to our WiseTech. That stock fell a little bit when the CEO was on the front page of the newspapers.
We actually saw that one as actually a buying opportunity because we think this is a very established business, unbelievable market position, strong growth prospects, good management team, and so we actually used weakness there to add. We topped up our ARB, Block, Redox, and NEXTDC. NEXTDC has been quite weak in the market, so I've added to that. I'll come back to a couple of those shortly, but we have talked through some of those stocks at previous presentations, and some of the new stocks, Region, we actually spoke about that at the AGM, but I'm happy to come back to that if there's questions. Amcor and EVT, there's a slide coming up. We will talk through the rationale of those. Sigma, this is the Chemist Warehouse businesses that's been backed into Sigma. Fixed our process really well, being that founder-led company that's dominating its market.
ReadyTech's a small position. It's a technology company. It's a founder-led business. We're only taking a smaller position at this point. We don't have an actual slide on this, but they generate good annuity income streams. They provide software mainly into the TAFE to help them run their businesses, and we still see some good growth there, and we think it's very reasonably priced. Life360, we touched on before, and Cuscal was an IPO. They are a payments company, so they offer payment services to the smaller banks in the market, so there's a range of banks they provide that to. It's got a very strong market position. We thought it was priced very fairly in the market, and so we took a small position in that one. Happy to take questions on those at the end.
Just in terms of performance, I think it's worth highlighting on the next slide. Again, we've touched on these throughout the year at our July webinar and also at the AGM, but just the importance of keeping capturing opportunities in stocks that fit our frameworks because that's what drives ongoing performance. As I touched on Sigma, the Chemist Warehouse deal, we took a position in that before the ACCC approved it. We just thought it would be very difficult for the ACCC to knock that back given that Chemist Warehouse is a very strong competitor to the major supermarkets, and our sense was that the ACCC won competition against the supermarkets. We were willing to take a position in that, and the stock's rallied pretty hard since that deal was approved.
It's a good position. It's one we could have more of going forward, but it fits that category killer, big market opportunity, well-run company. And so that's added value in this half. We talked previously. In the start of the first half of the year, we took a position in Tech One. We think it's one of the best quality stocks in the market. Strong track record of annuity income.
They provide software into government and universities. Universities are a big part of their business. They're growing in the U.K. Very consistent earnings profile, return on equity of over 30%, no debt. It's got everything we look for in the company, and we took a position in that in the first half. And subsequent to our investment, they did a big strategy day, and I think the market's really caught on to how good this company is. So that's added value.
We added Block, which was a newer stock. We saw some value in that business, 65 million customers, opportunity to grow revenue from those customers. We thought it was cheap, and now the market's starting to realize that. And Redox, another founder-led company, 30-year track record of steady growth, high return on capital, lots of growth opportunities. So all those stocks perform. We're newer stocks, but they perform really well. We were early to the story, and they've added a lot of performance to the portfolio. Along with some of our existing companies had strong halves like Objective, Netwealth, founder-led businesses, Breville, Gentrack, founder-led characteristics with strong CEOs. They also perform very well in the half. So just moving to the next slide, two of the newer stocks, Amcor and EVT, and I'll get Gilbert and Jaye just to talk about the rationale for adding those.
Thanks, Mark. Good afternoon to everyone on the call. So Amcor is a global packaging company with a market-leading position in consumer segments such as food, beverage, and healthcare. Their customers include the likes of Nestlé, Johnson & Johnson, and Coca-Cola, which are all obviously well-known brands. There's a very good chance that while you may not recognise the Amcor brand in itself, if you do walk into your kitchen and go through the pantry, a good number of those packaged items will be, or the packaging will be, manufactured by Amcor. So in November last year, Amcor announced a merger with one of their global peers known as Berry Global Group, which is listed in the U.S. And we think the merger has good strategic rationale. The products that they produce have complementary nature from both, I guess, a product and a geographical perspective.
We also see significant cost synergies or savings once the two companies have combined. Historically, Amcor has undertaken two major transformative deals over the past 20 years, being Alcan in 2010 and Bemis in 2019. Both of these acquisitions, like Berry Global, offered significant synergies, which served as operational tailwinds for Amcor's EPS growth in the years following. We see a similar trend ahead for Amcor's earnings, and our due diligence has suggested that the synergies, which are in large part based on the combined group's procurement capabilities, are realistic. In addition, we believe that the current valuation is not reflecting these benefits. Our confidence is further reinforced by the track record of the team at Amcor, who have a very strong history in delivering these synergies. I'll now pass on to Gilbert to speak to EVT.
Thanks, Jaye, and good afternoon, everyone. EVT owns a portfolio of entertainment assets. The key assets are cinemas, hotels, and EVT's Thredbo Ski Resort. We initiated a position in the stock after it sold off on the back of cyclical weakness driven by a soft film slate following the Hollywood writer's strike and unfavorable weather conditions, which drove a lighter ski season. We believe EVT has passed through the worst of these cyclical headwinds and are well-positioned for a cyclical recovery.
We also see strong latent value in EVT's property portfolio, with the market cap of EVT trading below the most recent third-party valuation of EVT's property portfolio. EVT has potential to realize this valuation uplift and have committed to a structural review where they have optionality to recognise shareholder value through evaluating opportunities such as divesting non-core properties, selling non-core segments, and development opportunities with their hotels. Importantly for our investment process is the strong insider alignment with Chairman Alan Rydge, given his substantial shareholding. With that, I'll pass back to Mark.
Okay, so thanks, Jaye and Gilbert. We'll move to the next slide, and I'll just pick up some further comments about those two stocks. We just think about the holdings in AMCIL and how we view the thesis behind them, so obviously, as I've touched on earlier, we're dominated by what I'd call probably structural compounders, so these are businesses that have that leadership position, lots of growth opportunities. They generally produce very good return on capital, and we think these are stocks you can hold for very long periods of time. We're happy for steady growers like CSL and Macquarie, Wesfarmers. I'll come back to CSL in a minute. At the right time, you can buy good income stocks.
So we really built up the banks about a year ago when they were cheap. Obviously, we're starting to exit some of those. And in fact, the last two holdings, Westpac and NAB, we've continued to trim, but we've also now started selling call options against those holdings, which means we get two sources of income: franked dividends plus option premiums. So they produce pretty good yields for us. And then the two stocks we just talked about, although there's a strong bias to finding the great structural compounders, we're happy to look for a value anywhere. And stocks like Amcor and EVT, if we can really understand the opportunity and we think it's not factored into the price, what we call cyclical asset plays like those two, we're happy to take positions in those if we think we can make a bit of money over the next few years.
We don't have to hold them forever, but we certainly think there's a bit of an opportunity there. So if you move on to the top 20 holdings now, just trying to demonstrate that we do hold our stocks for very long periods of time, trying to get those benefits of great success stories. I think this is a piece of the market that was underappreciated for a long time. I think it is starting to be more appreciated now. It's that great stocks produce great results. It's not over five years or 10. It'll be 15, 20, 25 years. So that supports our thinking around being a longer-term investor. So you can see we've had good holdings, good long-term holdings, and lots of our top 20 stocks. So if we just move to the next slide, just a bit on markets and how we're seeing at the moment.
This is just implicitly a chart of the P/E of the Australian market that goes back 20 years. And you can see at the moment we're trading at pretty elevated levels, and this is why we're a little bit cautious on markets, why if the stocks are pushed to extremes, we're happy to take a bit off the top. We do have to be careful about that because it always sounds great to trim good companies, but my experience is that unless you can pick the absolute extreme, you're better off just leaving them in the portfolio. So one thing we're conscious of is that when markets are strong, the first thing you should be doing is trimming, I guess, the lower-quality stocks in your portfolio. We do like the banks. We think they're good businesses, but we're not seeing a lot of profit growth.
So they've been very strong, so we've had a bias towards taking some money out of those. And so we're just cautious. We've got to keep assessing: are we in good stocks? We're just doing a bit of work at the moment, saying where we see again our individual holdings against valuations to make sure that if there is some sort of downdraft at some point, we're not too exposed. As we know, it's hard to pick. Companies can stay overvalued for very long periods of time. We just don't know. But we've got to make sure that, one, we're holding good stocks, we've got opportunities, and that we're not holding, I guess, too big a position in any stock that is overvalued. And it's not necessarily just high-quality, high PEs because often those sort of stocks are giving you great earnings growth. It's any stock, really.
Then just on to the outlook comments. We do think earnings growth is becoming a little bit more challenging due to some more subdued economic conditions, but the U.S. economy, and even here, keeps chugging along in spite of valuations being elevated, which I've touched on. Interest rates uncertainty, it's going to continue to create some volatility. The market keeps wanting to expect there'll be rate cuts. My commentary around that, maybe we need to get used to the idea that really when you look at a long-term view, these are more normal rates. Maybe there's some capacity to cut if things slow, but I don't think they're going to go back to where they were a couple of years ago when you had rates heading towards zero. That's just not history says that's not going to be the case.
As I said, if you go back over 100 years, these are around or close to that longer-term average. We've got a little bit of cash at the moment to take advantage of opportunities, and so in summary, we think the portfolio is positioned well. If there is some volatility, we've got good companies, good management teams. We think our companies can have a purpose to driving growth.
We want to be in stocks that can grow their earnings, and we want to stay with the good quality stocks, and I think it's important that we keep trying to capture opportunities because if you capture the opportunities in the good stocks, you're less likely to drift and try to look for value in lower-quality companies. And I think what we've given you is some examples of us trying to capture opportunities in the good ones, therefore trying to avoid value traps in the market. So with that, we'll open it up for questions.
All right, thanks, Mark. I'll coordinate these questions. So just a reminder, ask the question at the ask question box at the bottom of the webcast. So the first question we have here is about: there's been a lot of interest in data centers and also private lending. Are they areas that you have a view on?
Yeah, I'll pass to Gilbert for that.
Sure, thanks for the question, Graham. Data center space is a space where there's significant long-term tailwinds related to demand from AI. The data centers really are the home of where the computation for AI sits. So we've seen an acceleration in the long-term demand profile. The catch-up in building supply is a multi-year process. So temporarily, you've seen demand really accelerate and returns, and the near-term outlook for these data center operators is very strong. So we've got exposure in that through the portfolio with positions in NEXT DC, Macquarie Technology, and Goodman Group. On a longer-term view, we're mindful that there is a significant supply response underway. So we will continue to monitor this, and we are aware that the barriers to entry in terms of fulfilling the hyperscaler demand from these big U.S. customers is lower than the colocation work they've done more of historically.
Yeah, so I guess in summary, we think that it looks pretty good for the next two or three years for those that already have positions and are building out data centers. We think the demand is real, but I guess we're expecting to go into a period soon where you'll start getting some contract wins over the next couple of years. We think that'll be positive for the share prices, but we are conscious that it's not a set-and-forget these things. If we do get some strength, we've got some good exposure at the moment, but we'd have to then reassess if we see a strong response from share prices.
Thanks, Mark. A couple of questions here around the, I guess, the discount, the buyback, and the DRP. With the wide discount, how come the share buyback has stopped? Also there's a thought here about how about neutralizing the DRP by buying shares on market to satisfy.
Yeah, so obviously with the buyback, we can't do it around the reporting of the results. So we go into a sort of a blackout window, if you call it that. But with the release of the results, and there's also some timing around the end of the month, I think we've said quite openly that we will continue the buyback if we see a significant discount, and the point around is spot on. Neutralizing the DRP is a very clear strategy for us with the discount where it is. So we would expect that that would probably be ongoing if this discount continues.
So somewhat Mark is a related question, but the discount to NTA represents a fantastic - I'm quoting this, it's not me saying this - it represents a fantastic buying opportunity. Do you think the discount might reduce as people realize that there is value on offer?
Well, look, I guess that's what we're hoping at the moment, and I guess we're just trying to get out more in the market and talk about the benefits of LICs and how they're different from ETFs, but particularly from managed funds. Look, it was only a couple of years ago that our LICs were trading at a ridiculous premium, so it can swing around very quickly. And we've traditionally seen our LICs lag in hot markets. This has been a hot market, and there's no doubt there's been some poorer performing LICs that charge high fees, performance fees that haven't done well. I think they've dragged down the sector a little bit. I think the other thing is we've got to, I think, continue to be on the front foot saying not all LICs are the same.
We class ourselves as a traditional LIC, and then what I call the newer LICs are the ones that have a management business off to the side that charge fees, and then they want to charge performance fees on top of that. So I think people looking into the sector, you really have to differentiate between traditional LICs that we are, which is we're just cost recovery. There's no external manager, there's no performance fees, and those that are charging the high fees. So we think we're very different. So we want to do a lot more work to differentiate ourselves from the rest of the market. And being an LIC means that we've got our capital base is fixed. We don't have money flowing in or flowing out that we have to manage. We've got a fixed capital base. We can buy and sell things whenever we want.
So I think it's a great way to actually manage a portfolio. And at this point, at least, I'm sort of thinking that this is probably more opportunity in the market that they've suddenly dropped to this sort of discount. So we're just going to continue to sell the story into the market.
It's one of the reasons why we're doing a buyback. We think it is a good buy.
Yeah, that's right.
So Mark, thanks for that. So I guess there's a related question here. You raised issue, Andrew, about ETFs and LICs. Mark's sort of covered a bit of that, but do you want to talk a little bit more about what you've talked a bit there?
I'll just make one other comment. I mean, given how low all our LICs that are part of our group are very relatively low fee structures, then the question is, why would you buy an ETF if you can buy one of these funds at a 10% discount, so I go through our portfolio and multiply every stock price by 0.9, which is effectively what you're doing, and you're buying at a 10% discount, and say, what do these prices look like, and they look all right to me, so did you have anything else, so we might cover off the sort of tax implications of ETFs.
I was going to say, so there are two sorts of ETFs. There are managed funds which have, like us, they will go for an active management of the portfolio. They will look at term stocks. Quite often, they have a much higher MER, as Mark has said.
Because they are trusts as well, they will simply distribute the income and the capital gains they get. The capital gains is an interesting point because you may see the headline return and the headline figures, but when you're dealing with trusts and ETFs, there's a lot more tax. You also don't necessarily get to see an annual report, get to see the people who are running it, get to ask questions. These are all things that an LIC with this traditional listed structure and ASX corporate governance has that it can offer. Even with regard to what they call an index tracking fund, you think, all I'm doing is just buying the shares in the market. There are two sorts of index tracking funds. There are synthetics that don't actually own the underlying stock.
And if they do own the underlying stock, then again, you have to consider that there will be tax implications as people buy and sell out of those as stocks move in and out of the index. That will be passed on to shareholders and isn't necessarily considered in the total return figures that you get. And again, there is also not the same sort of transparency. So for both of those sorts of ETFs and LICs, and there is a place for them in the market, absolutely.
I mean, if you want an index track and you're aware of what you're going into, of course you can. Good luck. With an LIC, we can create reserves. So therefore, when times are fallow, we can keep reserves, keep profits, and then pay out a dividend even though the distribution of the income that we receive has fallen. We saw that in the GFC. We saw that in COVID. Those are attractive elements, we believe, of an LIC. Hopefully that helps, and that's given you some more information. There is more details, etc., on the benefits on the websites.
Thanks, Andrew. I've got a question here about Region Group and why we like that more than perhaps any of the other REITs in the market.
Yeah, look, it's really a decision we're taking for a bit of income. The reason we liked that one was the yield, simplistically. The yield is about 6.5%. We think they've got a pretty good focus on what the assets are, and we expect they should be able to get back to growing their income at about 3%. And so if you're getting a yield of 6.5% and you can grow it to three and it's around fairly valued in what is an expensive market, that kind of looks okay to us. What I don't like is some of the other property trusts in the market that are trading on yields in the fives or even some in the fours because you've got to produce some pretty solid EPS growth alongside it to make it into a reasonable investment.
And that sort of analysis of REITs is the way I look at it because I don't look at the NTAs that the companies put out because I don't think that's the way we assess it. It's the way the industry assesses it. But I think the industry has a much lower return hurdle that they're trying to meet to produce those NTAs. I think they accept 7%-8% type returns to come up with the NTAs they put out. I don't want a 7% or 8%. I want 9% +. And to me, Region's the only one that fits that criteria. So we've taken a bit of a position there, but it's more just about harnessing the income.
Thanks, Mark. This question here about ALS , and do we feel as though it's approaching a good buying opportunity?
Yeah, look, probably we think it's a good business. And just to remember everyone, we had a strong overweight position, and when it traded in the high 30s, we took a lot of stock out and made it a much smaller position. I think probably it's more come back to a fair value rather than being cheap at this point. We're continuing to hold at this point, but I think we probably need to see it lower before we add it more, or a greater sense that there's going to be some stronger earnings growth from here to say, yes, buy some more.
Thanks, Mark. Question here about have we ever considered gold as a precautionary investment against unforeseen market downturn?
Look, not really because if you like gold, buy gold. I mean, we're not a fund that buys gold. You can buy gold companies, but the gold companies never end up doing as well as the gold price because there's so many issues. We're trying to mine the material that when you look at some of the gold companies, there's some yeah, we think Newmont is a very well-run company, but it's complex running a mine, and the yield is not that high.
And if you look at the 20-year track record of earnings growth, it hasn't been great. And so we want to invest in our style is to find businesses that can grow their profits over time by staying in things that they can control. So that means they've got a great product, a great service, and there's a big market potential. That's in their control. That's what we want to reinvest in rather than I've got no idea what the gold price is going to do going forward. So again, it goes back to if we can capture opportunities in Tech One and in Sigma, that's really our space.
We're an equities investor.
Yeah. Well, we're investing in great companies, yeah.
That's right. Yeah, that's right.
Question here about Ramsay Health Care. Any thoughts on that?
Look, the share prices, and we obviously don't own it, and that's something we look at from time to time. Share prices fallen a lot, but I still keep going back to I had a brief look recently. Yeah, it's just got lots of challenges at the moment. When you put it through our frameworks, it still doesn't come out that well, and I acknowledge that if they sell their European assets, there's an opportunity for some sort of re-rate. But once again, if that doesn't happen or they don't get a great price, what are you actually investing in? Our bias is still to find companies that we think can grow and develop themselves rather than sort of messing around with trying to pick a point where, I mean, I've heard from lots of people that it was cheap at AUD 60, then 50, then 40, now it's 33.
You can spend a lot of time and energy on these sort of things. At some point, someone will get it right, and there'll be a low point. It's never the same ever. And so I think it's something we have to keep looking at as we mentioned with EVT and Amcor. There's a price for everything, but it would still have to fulfill the criteria that we apply to those stocks is that we can understand, we can observe that things have turned for the better. We're really happy with the people. We're really clear about how the business can get back to growing and where the value can come from. There might be a time and place, but I'm just not sure we're there at the moment.
Thanks, Mark. Talking about stocks that potentially probably don't fit into our universe, SPC Global, is it something we've looked at at all? I mean, this is the old SPC produces fruit and vegetable juice products.
Yeah, look, it probably just doesn't get through our frameworks in terms of what we're trying to do. And it doesn't mean there can't be a time to buy it, but we've got a pretty strict criteria, and I think it's there for us.
Okay. CSL, we're aware that the share price really hasn't moved for the last five years. Why do you or how do you feel it's still very attractive?
Yeah, look, this has been disappointing because it's sort of been the anchor in the portfolio. We've had a big position in it, and it's just gone backwards. It's a bit hard to work out. I mean, I would probably more classify this as a good fair value at the moment. I mean, I wouldn't actually say it's cheap. It's a good fair value in a market where everything else is really expensive. They should have three or four years of strong earnings growth in front of them. And if the market starts to believe that, you might see it trade up a bit from there.
Look, there's a few things I don't quite understand in the market, which is the relentless rise in the banks, but there's essentially relentless selling in CSL. So you wonder whether large institutions sort of got a bit caught out by having too much in CSL and not enough in the banks and whether they're switching going between the two. I think most of the analysts in the market have valuations around AUD 320. It's a good business. So we've borne underperformance. So I think we just hold with it and hope maybe the next result, if they're still talking about double-digit earnings growth for the foreseeable future, maybe the market will finally start to believe the company and there'll be some better performance.
Question here about the interim final dividend, saying that we've indicated we'd be trying to more closely equalize interim final dividends. I'm not too sure whether we've done that, but is it still on our agenda?
Yeah, I was going to say, just look, and I'll pass to Andrew. Look, I think that probably comes back to the initial introduction of the interim, and we certainly had some feedback about trying to get an interim. But I think where we are at this point, we do sometimes pay some capital gain, but we don't know the capital gains until the end of the year. So any special dividend we might pay are more likely to come through at the end of the year.
No, that's what I was going to say. Absolutely. We do look to pay special dividends when it's appropriate. That will be dependent on the level of realized gains, which we won't know till the end of the year. So if the ordinary dividend were to increase, that's something that the board might consider. But generally, in terms of the total dividends, more likely to get the special at the end of the year.
You may mention this before, Andrew, but it gets back to the benefit of listed investment company in terms of the ability to have reserves and level of franking credits that we've got within.
Absolutely. And at the moment, at the end of the year, for instance, the company had franking reserves of about AUD 0.04 per share. So in other words, you could pay a franked dividend of AUD 0.04 per share after we paid the final. Looking at those figures for the half year, it wouldn't surprise anybody that it's pretty much about the same.
But we also have, w e owe tax of about AUD 0.02, which would equate to a franking credit of AUD 0.02 per share additional distribution if we pay the tax that we have on the balance sheet for the realized gains that we've made so far this year. Now, I'm not saying that all of that will be paid out, and we won't know what the position would be. But yeah, that is why keeping those reserves, keeping that franking credit means we can normally seek to maintain the ordinary dividend.
Thanks, Andrew. Question here about IDP Education, which we've obviously been very patient about. What triggers do you see to continue to provide hope for us?
Yeah, look, I think the reason we've hang on, I'm going to say this is sort of it's a good stock in our frameworks, but it's got a couple of issues with our factors, which is outside influence because government has a big say. And the sense of annuity revenue stream, they need new students every year. So it's down a bit on the quality, but it's still a good business. I think the main thing we look for is that our main interest is always about the market structure, and so we're always very interested in companies that when you look at the market structure, it's still very fragmented, but you've got one company that seems to be starting to build our leadership position because that's the company that's willing to invest in capital and putting technology, so IDP exhibits all those characteristics.
They've built out some good products with technology, and through what has been a tough time for the business, it is interesting that the profits haven't collapsed, and that's because they continue to take market share from all these mum and dad operators, and this is a global business, which means the, I guess, the model we look for is the best player in a segment that's still fragmented is playing out. If you get some stability in the student market globally, or in fact getting back to growth, they are in a stronger position than their peers, and they should have the ability to grow earnings strongly from there. So it's that characteristic. So as long as we keep seeing them growing market share, we'll keep holding because it's that characteristic that should drive long-term growth.
Thanks, Mark. Question here about the, I guess, the retiree downside thematic. So any interest in stocks such as Lifestyle Communities, Ingenia, and Stockland?
Yeah, look, interest levels are not high. We've followed Lifestyle for some period of time, but it all gets back to what return on capital do these businesses actually make at the end of the day? And with Lifestyle Communities, they end up having to take on a lot of debt to push growth. We've got companies like we bought Tech One that takes on no debt to grow their business. In fact, they just reinvest their cash and make really high returns. We had an opportunity there. Why do we need to go into these? And so, yeah, I just think they're harder businesses. They're capital intensive.
They have to lean on debt. Property prices are an important part of the model. And we've just seen better opportunities. They're not to say they're bad companies. If you buy them at the right time, you can make a bit of money out of them. But it's just not high on our watchlist given the complexities that those companies have.
Thanks, Mark. Next one, not too sure it's a statement or a question, but Goodman Group and NEXTDC still appear better options than DigiCo and even HMC to play the AI wave.
Yeah, well, look, I think, I mean, our concern w ith DigiCo and stuff is all the fee leakage that went to HMC Capital, etc. So when you see those sort of companies come to the market, it's not for us. We'd rather be in NEXTDC, which is that's their bread and butter. They've been doing it. We like NEXTDC because of the network effect that they have. They've got the best network of centers around Australia. It's their passion.
The CEO is very connected into the U.S. tech sector. And we like the founder-led characteristics of Macquarie Telecommunications Technology, sorry, Macquarie Technology. And then obviously, Goodman Group, it's actually more about the quality of the land banks they have around major cities that makes them so attractive. That's really the strategic advantage that they have. And that's their bread and butter. So we like to stick with companies that that's their core business, and we don't really need to go into other things.
So there's a question here about what makes Australia an attractive place to invest, and do you expect to include ex-Australian companies, overseas companies in the portfolio at some point in the future?
That's a good question. I guess when you think about is Australia an attractive place to invest. Well, we invest in companies. So anywhere's attractive if there's good companies. You find good companies that can grow, and this is a safe market. So if we can still see good companies in Australia, that's great. But we actually have been talking about, and we have mentioned this a few times in the presentation, that there might be a time and place where we do put international stocks.
For those that follow our group, we've got an international team that are managing a small portfolio within AFIC. If we can find, it's very easy for us to buy international stocks now within AMCIL. It's ringing up a broker. We tell them to buy it. What we think this would add value to AMCIL if we can find some good opportunities. It has to be very specific, and it has to be stocks that really line up well with the frameworks that we've been talking about for two years now in terms of the sort of screens that we put on stocks. If you find something that lines up really well, I'm very happy to buy an overseas stock or a few of them. We haven't. Would it be 10%, maximum 10% or 20% of the portfolio? They're things that we could discuss.
But certainly, since we've had the investment team, there have been a few stocks that the international investment team that I've bought. They've just said, "Wow, that would line up perfectly in AMCIL against our frameworks." Those stocks have done really well. It'd be something else to differentiate it. Yeah, so that's certainly on the table.
I suppose the other point, Mark, is a lot of the companies actually have in the portfolio got significant. They're all mature and profitable operations.
They're all international stocks anyway. I mean, it's just that where they might be and some of them have dual listings that we own anyway. Amcor really is a primary listing in the U.S. now and ResMed. If you look through all our stocks, they're global international businesses. Even Mainfreight that we own, we buy that on the New Zealand.
That's an international stock already. So in that regard, it's nothing new. It's about, but we need to be consistent with our frameworks that we know work. But we've seen opportunity where we're happy to look at it. One quick thing I'd say for Australia, and just we should not lose sight of it, and it doesn't necessarily overpower all the other things, is the franking regime is an important part of investing and means that you don't get double taxed on your income. So no shareholder should lose sight of the value of that.
Question here about Treasury Wine. Do we see that as an attractive asset? Look, we look at that from time to time. I think it's well run. I think the management team and CEO are good.
Yeah, there might be a time if there's a dislocation. I think when China was throwing in the tariffs at it and the stock sold off, that was a good time to buy it. It is a tough industry because they have a good portfolio of products, but still, it's a very competitive market. And that's probably where we struggle a bit against our frameworks because it's really hard to get a true leadership position in what they do. And so in that sense, there's a lot of things that are out of your control in the business. So I would never say never, but it's probably not a high priority for us.
All right, Mark. I have no other questions. And the number of viewers is going down slightly, so we might end the call there. So if you're okay.
So well, thank you, everyone, for attending. Just to remind everyone that in March, we do Shareholder Information Meetings. So, where most of the investment team will go around to most of the major cities in Australia. That's a great opportunity if you want to meet us and ask questions and information on our website. But obviously, the next webinar we do will be around the full year result in July. So, thank you again for participating.
That does conclude today's webinar. Thank you for your participation. You may now disconnect your line.