Cedar Woods Properties Limited’s (ASX: CWP) shares uplifted by 2.264 percent on 1 November 2018, following the release of first-quarter update in which the company reported that it is on track to deliver a strong increase in FY19 earnings after a solid first quarter, driven by sales across the portfolio and significant progress at a number of key projects.
The company reported record pre-sales of $376 million in Q1 FY2019, which is 21 percent higher than the prior corresponding period. As per the company’s operation update, the project construction is underway in all four states in which the Company is currently operating, with significant stages expected to be delivered and settled in FY 2019.
The Australian housing sector is getting support from a low-interest rate environment and population growth in each of the Company’s key markets. The conditions of Queensland and South Australia are looking positive, with projects in both markets continuing to progress well. The project performance in Victoria has remained relatively consistent, with continuing demand for several infill projects in established, low supply locations in Melbourne’s metropolitan area, despite reduced overall buyer numbers. The outlook for the Adelaide market is positive and the first Glenside apartment building branded Botanica, recently launched with 86 apartments.
In FY 2018, the total revenue of the company increased by 7.8 percent to $239.7m as compared to the corresponding previous year, driven by the two percent increase in product settled and a higher proportion of apartments and townhouses, which have a higher price point than land lots. The net profit of the company was down by 6.3 percent against the last year to $42.6 million. The earnings per share of the company decreased by 6.4 percent to 53.9 cents in FY 2018. In FY 2018, the company reported Return on Equity of 12.1 percent and the total shareholder return of 16.5 percent.
The company moved into FY2019 with a positive outlook for its business, buoyed by a record level of presales and a number of exciting new projects, such as Glenside in Adelaide and Wooloowin in Queensland, which will be strong contributors to growth in coming years. A number of new projects are expected to contribute to earnings in FY 2019, including the Target Headquarters office at Williams Landing, 111 Overton Road, and Lancaster Apartments, St. A and Glenside (SA). Various other projects in the portfolio are expected to contribute earnings for the first time from FY 2020. The contributions from new projects and strong presales are expected to drive a strong uplift in net profit for FY19 and provide a positive medium-term growth outlook for the company.
In the last six months, the share price of the company decreased by 12.83 percent as on 31 October 2018, traded at a PE level of 9.830x. CWP’s shares traded at $5.420 with a market capitalization of $424.62 million as on 1 November 2018 (AEST 4:00 PM).
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