AM Research has posted a 23 per cent increase in profits to $19.5 million for the year ended June, as the listed investment company combs for more opportunities to deploy cash into the volatile equities market.
The company, which has a market valuation of $200 million, posted 17.1 per cent gains during the year – outperforming the S&P/ASX All Ordinaries Accumulation Index’s 5.7 per cent return during the period.
Chris Stott, chief investment officer at WAM Research, remains optimistic about the Australian equity market’s returns during the new financial year.
He expects the market to benefit from low interest rates and improving domestic economic conditions.
“Despite mixed conditions, opportunities will continue to present themselves. The prevalence of cheap debt and the strength of company balance sheets will drive merger and acquisition activity in the coming financial year,” he said.
“This calendar year has been already marked by major bids, such as iiNet, Amcom, Toll Holdings and Asciano.”
WAM Research’s results come during one of the worst days of trading on the Australian Securities Exchange, as tanking Chinese sharemarkets wipe out the past two years of gains on the local bourse.
WAM investors will pocket a final dividend of 4¢ per share, bringing the full-year dividend to 8¢ per share, or an increase of nearly 7 per cent from 2014.
“The current reporting season is delivering mixed results. We believe strong corporate earnings are needed to see equities trade higher,” Mr Stott said.
“Companies with valuable intellectual property, strong cash flow, and a strong strategic position in their industry will be attractive to potential suitors. We believe many of these targets exist in the small cap space as larger companies look to absorb smaller players to deliver synergies and growth,” he said.