Stockland Group (ASX:SGP) announced strong full year result for FY15 lifting underlying profit by 9.4% to $608m. Revenue increased 19.6% to $2.6bn as the company experienced strong growth in all cores business areas.
Stockland Group traded already ex-dividend on 30 June distributing a 12 cent dividend to eligible shareholders. The company intends to lift its dividend for FY16 to 24.5 cents, which is a slight increase to last year’s 24 cents. Stockland’s current payout ratio is 93% if underlying earnings per security, which emphasises management’s effort to reward SGP shareholders.
SGP was last traded at $4.16 on Tuesday, trading basically flat for the past 12 months. However with a strong yield of 5.8% at the current price, SGP has proven to be a worthwhile and solid investment opportunity.
Stockland Chief Executive Officer and Managing Director Mark Steinert is pleased with the ‘sustainable growth’ and it is a result that demonstrates the ‘significant success implementing our (Stockland’s) strategy.” He said: “All core business areas contributed with Residential, Retirement Living and Logistics and Business Parks each up more than 15%. Retail which reliably provides around 60% of the group’s earnings, was up 4.2% on a comparable basis.
The company expects the strong momentum to continue through FY16 and targets EPS growth of 6-7.5% as well as 8.5-10% increase in Funds from operations (FFO) per security. The targeted growth will then result in an increased dividend as mentioned above.
Statutory profit increased to $903m which includes a $297m revaluation of Commercial property assets as well as $80m gross profit from the sale of its interest in Australand.
Stockland’s results are expected to satisfy shareholders as management executes the company’s strategy in a disciplined and sustainable way. The company’s balance sheets remains solid with gearing of 23.4%, which is at the lower end of the company’s target range. All core operations achieved guidance and are expected to carry momentum throughout FY16.
Wise-owl subscribers bought SGP a while ago following our recommendation and we will inform our members exclusively about any valuation updates regarding this position.
Author: Simon Herrmann
Aug 19, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.