On 14 February 2019, Goodman Group (ASX: GMG), a company from the real estate sector and engaged in industrial and business space property, development and funds management business, announced its half-yearly results for the period ended 31 December 2018.
During the period, GMG was able to successfully deliver a strong performance where the company’s operating profit was $465 million which was up by 10.4% as compared to 1H FY2018. As a result, the EPS also increased by 9.4%. The operating earnings per share in 1H FY2019 was 25.5 cents. The gearing during the period was 6.5% as compared to 5.1% PCP. The distribution per security (DPS) at 15 cents was up by 9.1% in 1H FY2018. The statutory accounting profit during the period was $929.2 million.
The strong demand in the infill global markets of the company was driven by the structural changes in its customer businesses. Technology and modernization of supply chains were the driving factors of increased demand. Based on this, the company is working on 68 projects in 12 countries where WIP at present is approximately $3.6 billion and is expected to go beyond $4 billion in the near future. The location and the quality of the assets of the company in partnership gave a strong performance during the period. There was a growth of 27% under external assets under management to $39.6 billion. The total assets under management (AUM) during the period was $42.9 billion, up by 24% on FY2018. The growth in AUM received support from revaluations and investment, majorly through the company’s increasing development activity and completions.
During the period, there was an improvement in the property fundamentals. The reason of improved fundamental was due to tight supply in the location of the company which was supported by strong performance across the investment portfolio where the like for like net property income (NPI) increased by 3.2% with occupancy maintained at 98% as at 31 December 2018.
The presentation also highlighted that structural themes supported the market condition of the business. It involved strong development activity, strong property fundamentals as well as increased opportunities for deployment of capital. The supply and demand dynamics in infill markets was favorable with strong investment market demand.
By the end of the 1H FY2019 on 31 December 2018, the company had a net asset base of $1,236.5 million. The increase in the net asset in 1H FY2019 as compared to 2H FY2018 was due to the rise in the total asset. The total shareholders’ equity was worth $1,236.5 million.
The company generated net cash of $156.7 million from its operating activities. There was a fall in the operating cash inflow as compared to previous corresponding period majorly due to fall in the cash receipts from the development activities.
The company made payment for the equity investment worth $43.8 million and $0.3 million in payment for plant and equipment. However, there were cash inflows as well in the form of revenue from the disposal of an equity accounted investments and capital return from equity accounted investment.
The company paid the dividend and also generated loans with related parties during the period. As a result, net cash outflow from the financing activities was $67.1 million.
In the last six months, the stock has generated a positive return of 21.46%. With the close of the trading hours on 14 February 2019, the market price of the share is A$12.510, up by 4.25% as compared to the previous trading day’s closing price. The company has a market capitalization of A$21.77 billion and a PE ratio of 19.64x.
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