AVJennings Shares Tumbles on ASX Post Results Announcements for 1H19

AVJ

AVJennings Limited (ASX: AVJ) is one of the leading real estate developers. The company has key projects including Creekwood, Caloundra, Waterline Place, Williamstown and Lyndarrum, etc. The group has remained a recognised and trusted name in affordable housing.

On 11 February 2019, the company has announced its financial results for the period ended 31 December 2018.  The profit before tax and the profit after tax of the company stood at $2.167 million and $1.421 respectively for the half year ended 31 December 2018. The profit before tax and profit after tax declined approximately 91% compared with the previous corresponding period. The gearing ratio stood at 28.8% up from the previous corresponding half of 31 December 2017 where it stood at 25.5% and 20.40% as at 30 June 2018 respectively on the back of the settlement of Hall Farm. 

The prices in the major established housing markets are correcting on the back of the Purchaser confidence declining over the past six months. The company, however, believes that the Purchaser confidence has been suppressed by a combination of political uncertainty including Federal tax policy, and sensationalist press commentary about the outlook for residential markets coupled with the sudden reduction in the lending appetite of banks for residential properties. The management of the is not expecting any material change in conditions until after the occurrence of New South Wales and Federal elections.

While improving affordability of the buyers are encouraging the return of first home buyers to the market, however the impact of slower loan decisions and tighter credit conditions is significant, including second and subsequent buyers are no longer confident to contract prior to selling their existing home. These have slowed the transaction chain across the board.

Moreover, fully franked final dividend of 3.0 cents per share for the year ended 30 June 2018 was paid on 11 October 2018 (30 June 2017 fully franked final dividend: 3.5 cents). After the end of the half year period, the directors have recommended a fully franked interim dividend of 1.0 cents per share, which will be paid on 22 March 2019, and the dividend reinvestment plan has been suspended.

Now let us quickly have a look at AVJennings Limited’s stock performance and the return it has posted over the last few months. The stock is currently trading at a price of $0.545 and decreased by almost 3.54% during the day’s trade, with a market capitalisation of circa $229.52 million. The stock opened at $0.560 with its day high at the same price and a day’s low price of $0.520. The stock has yielded a YTD return of 6.60% and posted negative returns of 16.91%, and 7.38% over the last six months and three months period respectively, however over the last month it has generated a return of 7.62%. It has a 52-week high price of $0.805 and a 52-week low of $0.505, with an average volume of 87,617.


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