2024 guidance holds
RESULTS
Need To Know
- Earnings beat on stronger margins. EBITDA +7%, EPS +17% vs consensus. Well clear of the May guidance update.
- Cash generation was poor, with gearing well up from FY22. Both should improve in 2024, as developments move into the sale process.
- LIC has held a lot of guidance for 2024, which looks conservative given the sale performance of new developments.
Investment Implications
LIC reported an FY23 adjusted NPAT of A$71m, ahead of $62m consensus. Management guidance called for underlying NPAT to be in line with the pcp.
FY23 settlements of 356, were in-line with May’s guidance of 355-365.
EBITDA of $108m vs $101m consensus.
EPS 68cps vs 58cps consensus.
Cash flow disappointed at -$30m vs consensus at $6m. Gearing 41.3% is down from 42.5% at 1H23, but well up from 34.9% in pcp.
Dividend 11.5cps vs 10cps consensus.
Guidance has been held with a 1400-1700 three-year settlement target. Settlements are expected to be higher in FY24 vs FY23.
Implications: the result beat is not the focus of the FY23 results given the downgrades to guidance LIC put through over 2023.
Encouragingly the pipeline for development to convert into sales continues to look good for FY24/FY25. This should lift both earnings and cash flow, with the balance sheet improving as a result.
Development margins have held steady (a good outcome given industry conditions) and annuity income streams continue to grow. Settlements for FY24 stood at 330 on June 30, reflecting the introduction of new developments. We expect flat consensus earnings revisions for FY24E.
Investment View
LIC remains confident that new developments should materially contribute to meeting settlements expectations for FY24 and FY25, as new projects come online.
LIC is trading on a 12m forward PER of ~20x with earnings growth of >30%+ for FY24e. We maintain our Buy rating for LIC, based on the pipeline of new projects.
Figure 1: LIC settlement guidance maintained
Stock Overview
Share Price
Company Overview
LIC owns and manages affordable independent residential land lease communities. LIC has a number communities either under contract, in planning/development or under management.
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