Stockland (ASX: SGP) announced its market update for the first quarter of FY16 today.
Stockland has reported strong growth across all key business areas and is set to deliver underlying eps growth of 6-7.5% and Funds from Operations (FFO) growth per security of 8.5-10% for the year.
The company’s retail sector, which has 50% portfolio weight, has shown strong sales performance for the quarter. Quarterly sales grew 2.8% compared to the pcp and Stockland will launch a few projects in this sector before the year end. Its H&M flagship store is set to open ahead of schedule on 31 October in Glasshouse. The Wetherill Park project is also expected to be completed ahead of schedule and set to inaugurate before Christmas. Its other projects are progressing on time and are in line with feasibility. Stockland is trying to incorporate retail trends into its existing centres. The company expects to reach 175 casual dining outlets by the end of this year and sees a rising demand for after-hours cinemas, restaurants and bars.
Stockland’s Logistics and Business Parks activity has also seen strong growth. The lease and portfolio occupancy has improved to 93.8% for the quarter. The company’s Retirement Living sector is expected to have a stronger than usual profit during the second half, due to the launch and development of new projects.
According to Managing Director and CEO Mark Steinert, “This result provides high confidence for our earnings outlook this financial year and confirms that the markets where we operate remain healthy, underpinned by 73% owner occupied demand. We are also starting to see the benefits of our strategy to broaden our market reach with our medium density offerings and completed homes selling well.”
The company also reports it has positioned itself for sustainable long term growth and value creation as it is trying to deliver earnings per share growth and total risk-adjusted shareholder returns above the sector average.
The Stockland share is trading at $4.03 as of 10:45 AM and is trading unchanged compared to one year ago.
Author: Imran Valibhoy
Oct 26, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.