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Goodman Group Capitalises on Strong Real Estate Market

Goodman Group Capitalises on Strong Real Estate Market
Aug 13, 2015 By Ben Visser

Property giant Goodman Group (ASX:GMG) announced its full year FY15 results this morning. The company reported healthy growth in operating profit of $653 million and a statutory profit of $1,208 million.

 

During FY15 the group delivered an operating earnings per share growth of 7.1 per cent, while reducing debt to further strengthen its balance sheet. The group took advantage of market conditions by selling $1.9 billion of assets and reinvest this capital into its growing $3.1 billion development workbook, enhancing asset and income quality and generating higher investment returns at this point in the cycle.

 

The group expects current market conditions to continue and thereby forecasts earnings growth of 6 percent in FY16, while attempting to further reduce debt. The emphasis to reduce gearing will enhance the company’s operating and financial flexibility going forward.

 

Key financial results:

 

  • Operating profit of $653 million, an increase of 9 per cent on the previous corresponding period (pcp)

  • Operating earnings per share of 37.2 cents, up 7.1 per cent on the pcp.

  • Total dividend of 22.2 cents, up 7 per cent on the pcp.

  • Net tangible assets per security increased 20 per cent to $3.46

  • Total GMG shareholder return of 30 per cent during FY2015

  • Forecast FY16 earnings per share growth of 6 per cent and dividend growth of 7 per cent.

 

The group grew total assets under management by 13 per cent to $30.3 billion, reflecting increased valuations. It maintained occupancy at 96 per cent with weighted average lease expiry of 4.8 years. The company currently has $3.1 billion of development work around the world, with 65 per cent pre-committed and 71 per cent pre-sold, forecasting a yield on cost of 8.8 per cent.

 

Goodman’s share price has experienced steady growth over the last 5 years as the company continues to grow its assets under management, development pipeline and financial results. Financial year 2015 was no exception and has been reflected in the company’s share price. Financial performance came in as expected, however ultimately investors sentiment towards the group’s results will be expressed in trading today and may see some selling as forecasted profit growth is expected to decline.

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Ben Visser Author: Ben Visser Aug 13, 2015

Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.

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