HMC Capital Ltd (ASX: HMC) shares faced downward pressure on Tuesday following the company's latest trading update, which failed to meet market expectations.
The update disclosed a revised forecast for FY 2025 operating earnings per share (pre-tax) at 70 cents per share, down from the previous estimate of 80 cents per share. However, the company maintained its distribution guidance at 12 cents per share.
In a bid to capitalize on its successful first fund, HMC Capital is set to launch HMC Capital Partners Fund II (HMCCP Fund II), building on the 32% annualized return achieved by its initial fund since inception.
After conducting a strategic review with the Trustees of HMCCP Fund I, the company has decided to shift its focus towards high-conviction, high-upside opportunities, moving away from broad diversification. This strategic shift encompasses investments in both unlisted assets and select listed companies showing significant potential or M&A prospects.
David Di Pilla, CEO of HMC Capital, highlighted the success of HMC Capital Partners Fund I in delivering substantial and uncorrelated returns by employing a private equity approach to listed equities. He expressed enthusiasm for the upcoming launch of HMCCP Fund II, emphasizing the refined strategy and structure aimed at maximizing returns for investors.
Despite the market reaction, Goldman Sachs has maintained a positive outlook on HMC Capital, retaining its buy rating while adjusting the price target to $10.90 from $12.30.
With HMC Capital's current share price at $6.01, the revised target suggests a potential upside of around 80% for investors.
Reference from News: HMC Capital announces plans for new equity fund: Should I invest?