Next comes data?
RESULTS ANALYSIS
Need To Know
- In-line result. Operating conditions strong. EPS guidance in-line with consensus.
- Constrained market supply and strong rental increased lifted like for like NPI. WIP remains strong.
- New growth opportunities arising in data warehousing. Represents ~30% of the A$13bn work in progress (WIP) development pipeline.
Result overview:
EPS 94.3cps vs 94cps consensus
DPS 30cps in-line with consensus
Occupancy maintained at 99%
Like of Like NPI growth 4.7%
External AUM increased 11% to A$76.3bn
Investment Implications
Overall a solid result. EPS growth and DPS in-line with consensus. Like-for-like NPI growth accelerated to 4.7% (4.2% prev), driven by strong positive rental growth and constrained market supply.
The balance sheet remains in a solid position. Gearing decreased 0.2% to 8.3% (20% look-through) and hedging is ~70% over the next three years. Goodman group is typically conservative with its balance sheet so its not surprising that its come in at these levels.
NTA increased to $9.12 (up 9%) driven by strong operating profits and positive portfolio revaluation.
Management earnings came in at A$480.6m. This was driven by strong base fee's on a larger AUM base. No performance fees were included for 2H23 due to a change in recognition timing. Performance fees of ~A$100m are expected to resume in 1H24 (no change in the total $140-150m expected). The back log of ~A$1.3bn in unrealised performance fees remains.
FY24 guidance in-line at ~9% EPS growth. DPS of 30cps in-line.
Investment View
Industrial assets continue to be some of the best performing in the AREITs. Rental growth is strong, supply is constrained and demand is continuing to expand. In our view, Goodman group are well positioned to benefit from these industry tailwinds.
The development pipeline remains robust and management have continued to mention growth opportunities in area's such as data and residential. Datacentres are becoming a more meaningful part of business (30% of the A$13bn WIP workbook), with >3GW of potential power identified within the portfolio.
GMG remains best positioned to benefit from the growth of online business operations. At a 19x PER (a 1SD discount to its long term average), we see value at these current levels. Re-affirm our Buy rating.
Stock Overview
Share Price
Company Overview
GMG is a global property company based in Australia. It focuses on owning, developing, and managing industrial and business spaces worldwide, with segments in Australia/New Zealand, Asia, Europe, UK, and the Americas.
Disclaimers and Disclosures
Issuer
The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").
Reliance
Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.
General Advice
Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.
General Disclosures
This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.
Currency of Research
The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.
Access and Use
Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.
Equities Research Methodology
Please click here for information about MST equities research methodology.
Related Reports
From land to the cloud: New age for storage
Operating conditions continue to be strong for Goodman Group. Like-for-like NPI growth seen during the period suggests that logistics and industrials continue to outperform. Structural tailwinds will continue to provide Goodman with a strong growth outlook.
Industrial fortress
Industrial REITs remain the best-performing segment of the AREITs. A major market concern has been property value decline as cap rates expand.
It's not San Fran
Dexus remains the most heavily discounted AREIT despite the changing conditions for office operators and easing macro headwinds. News coming out of the US seems to be driving fear in the Australian market despite the landscape being vastly different.