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Goodman Upgrades Earnings Forecast with 1H19 Operating Profit up 10.4%

February 15, 2019

Goodman Group announced this week their results for the half year ended 31 December 2018 delivering an operating profit of $465 million, up 10.4% on 1H FY18, and operating earnings per share (EPS) of 25.5 cents, up 9.4% on 1H FY18. Statutory profit was $929.2 million, up 71%.

 

The Group has upgraded its forecast FY19 EPS to 51.1 cents per share, up 9.5% on FY18, maintaining its forecast full year distribution of 30.0 cents per security, up 7% on FY18.

 

Structural changes driving businesses have fuelled the continued evolution of the industrial property sector. Supply chain efficiency is critical for tenant success, with increased importance placed on the location and role of logistics and warehousing space. This trend has delivered Goodman a significant gain in valuation of $2.4 billion over the half for the Group and Partnerships, with like-for-like growth in net property income of 3.2% and a robust development workbook of $3.6 billion, expected to exceed $4 billion in the near term.

 

Group Chief Executive Officer, Greg Goodman said: “The results reflect continued strong performance across our management and development businesses. Our deliberate focus on infill markets, where property fundamentals are robust, has driven Partnership returns and significant growth in assets under management which are up 24% to $43 billion.”

 

Key highlights for the period are:

 

Financial

  • Operating profit of $465 million, up 10.4% on 1H FY18

  • Operating EPS of 25.5 cents, up 9.4% on 1H FY18

  • Statutory profit of $929.2 million (includes the Group’s share of valuation gains, derivative foreign currency mark-to-market and other non-cash or non-recurring items)

  • Distribution of 15.0 cents per stapled security (DPS), up 9.1% on 1H FY18

  • Gearing at 6.5%3 (look through gearing at 17.6%)

  • Net tangible assets (NTA) per security up 9% to $5.05 (since 30 June 2018).

Operational

  • Total AUM of $43 billion, up 24%, with external AUM up 27% on 1HFY18 to $40 billion, driven by valuation increases and development completions

  • Valuation uplift of $2.4 billion across the Group and Partnerships

  • Continued strength in property fundamentals resulting in occupancy at 98%, weighted average lease expiry (WALE) of 4.7 years and like-for-like net property income growth of 3.2%

  • Development work in progress (WIP) steady at $3.6 billion across 68 projects in 12 countries with a forecast yield on cost of 7.1%

  • Management earnings up 15% on 1H FY18 with average Partnership returns expected to be in the mid-teens for FY19.

Goodman's strategic focus on infill markets continues to be met with strong customer demand which is generating long-term value. Barriers to entry remain high in most markets. Market conditions remain robust with the shift towards increased automation, consumerism and heightened service expectations supporting Goodman's strategy. 

 

Goodman's, FY19 EPS guidance is being increased to 51.1 cents per share, (up 9.5% on FY18) and FY19 DPS will be up 7% to 30 cents per security.

 

 

GMG Trading Chart vs ASX200 AREITs

Blue - GMG 

Purple - ASX200 AREITs

 

 

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