Core Property has updated our forecasts for Elanor Investors Group (ASX: ENN) following the 1H24 results.
We have updated out earnings forecasts to take into account conservative assumptions for Performance Fees as well as higher corporate costs. We are forecasting FY24 Core Earnings of $12.1M (previously $16.0M) and FY25 earnings of $12.2M (previously $17.8M). Our blended valuation has reduced to $1.67 per security (prior $2.03 per security).
Core Property maintains coverage on ENN with a BUY recommendation. The market for ENN has softened after rallying to as high as $1.855 in 2023 following the announcement of the Challenger acquisition. We consider the market has not fully priced in the growth from the Challenger acquisition in the current economic climate. At current price levels we are forecasting a 5.9% distribution yield for FY24. We expect the key triggers for the share price to re-rate include confirmation of accretive earnings growth from the Challenger acquisition, establishing new managed funds, release and recycling of capital from managed funds and planned realisations.