Charter Hall Group (ASX: CHC) this week upgraded its expected earnings for FY26 by a further 3%, bringing the expected increase over last year's result to 26.5%.
Not surprisingly, the share price reacted positively to the news; however, two brokers that have issued research notes on the shares this week think there are more gains to be had.
Strength through diversification
In terms of where the growth is coming from, the company said its institutional property funds management platform continued to grow, "underpinned by increased allocations from existing clients and new investor gross equity inflows across institutional pooled funds, partnerships, and mandates''.
Charter Hall added:
Financial year-to-date gross equity inflows total $6.5 billion, representing an increase of $1.7 billion since 1H FY26. Growth has been driven by investor customers increasing allocations within existing investments, as well as diversification into additional Charter Hall managed strategies and sectors. Recent client activity has resulted in the addition of 25 new institutional investors to the platform over the last 18 months, including several institutions making initial allocations to the Australian property sector, supporting long term growth potential.
Charter Hall Managing Director David Harrison said regarding the upgrade:
Australia continues to attract institutional capital as a stable and highly dependable real asset market. We are seeing increased allocations from existing institutional investors alongside new domestic and offshore inflows seeking diversified exposures. The resilience of unlisted property returns, and inflation hedge characteristics continue to support strong investor demand, with Australia remaining a preferred destination for global capital.
Shares looking cheap
Broker UBS said in its note to clients that Charter Hall had delivered a total return of negative 17% over the past six months, worse than the broader industry's negative 10%.
They said Charter Hall's underlying price-to-earnings (P/E) ratio now sat below its 10-year average.
UBS said they "expected improvement in retail investor flows following the Federal Budget, which improves the relative attractiveness of commercial vs. residential property investment and will drive improved flows into property funds businesses, in our view''.
UBS has a price target of $24.75 on Charter Hall shares compared with $20.22 at the time of writing.
Morgan Stanley said in its note that Charter Hall had defied the view that higher rates meant less flows into real estate.
The analyst team said the company announced a number of positive developments which were on foot and "reading between the lines, it doesn't seem like the company has mid-single digit growth on its mind''.
Morgan Stanley has a price target of $26.89 on Charter Hall shares.
Charter Hall is valued at $9.75 billion.
The post After an earnings upgrade, 2 brokers weigh in on the value of Charter Hall shares appeared first on The Motley Fool Australia.
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