Outlook crumbles
1H23 RESULT
Need To Know
- EBIT growth guidance for FY23 has been lowered from 30-35% to 0-10%.
- Implies a 20% downgrade to market expectations
- Second downgrade within 3 months, coupled CEO selling stock will weigh on share price
Outlook FY23: a collapse in the outlook for new housing settlements has hit INA hard. The mid-point of guidance implies a 20% hit to market earnings estimates.
Weather-related construction delays and the emerging impact of higher interest rates are the culprits. Whilst weather related delays imply a catch-up in the future, the company notes that the average sale time in regional areas has gone from 20 to 40 days.
INA settled 125 homes in 1H23, with 350 contracts on hand now. The new guidance implies a stronger second-half skew to earnings with FY23 guidance now 370-420 vs 460-485.
1H23 Result: EBIT of $42m missed market expectations by 8%. This was entirely driven by lower development earnings. The Holidays business delivered EBIT of $20.8m which was slightly ahead of the market driven by strong occupancy, new product, and pricing. The near-term outlook for Holidays remains strong. A dividend of 5.2cps was below market at 6cps.
CEO stock sale: CEO Simon Owen sold 12% of his holding in INA in late November 2022, post the first revision to FY23 guidance. Today's downgrade will further compound investor frustration around the ability of the company to issue guidance.
Investment View
We have placed our rating Under Review.
The second downgrade to settlement guidance is expected to weigh on the INA share price for some time.
Whilst some of the delays can be “caught up” as the weather improves and construction delays reverse, the company is now facing a tougher climate for sales in key regional areas (the core of INA’s portfolio). This is likely to pose a risk to FY24 settlement volumes as well.
Specific Disclosure: Within the last 12 months, the company that is the subject of this report, has engaged MST Asset Management, a division of MST Financial, to provide referral services and may receive fees for such services.
Stock Overview
Share Price
Company Overview
INA is a leading operator, owner and developer of communities offering affordable seniors’ accommodation. INA has 90 communities (>13k income generating sites) with a book value of $1.2bn.
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