Are These 3 Real Estate Stocks Under Limelight - MGR, LLC, SGP

  • Mar 24, 2019 AEDT
  • Team Kalkine
Are These 3 Real Estate Stocks Under Limelight - MGR, LLC, SGP

Mirvac Group (ASX: MGR)

Strong Performance During 1H 2019: Mirvac Group (ASX: MGR) stock has risen 18.10% in the last three months as on March 22, 2019. The company for the first half of FY 19 has reported 26% growth in the operating profit after tax to $290 million on the back of strong performance of the investment portfolio and 38% increase in adjusted funds from operations (AFFO) to $252 million. During 1H FY 19, there has been 39% rise in the statutory profit after tax to $648 million driven by operating profit & profit of $392 million due to the revaluation of net property. Moreover, during 1H 2019, the company had a high occupancy of 98.6% and has already secured 83% of the projected 2019 residential earnings before interest and tax. The company currently has cash of $569.6 million. MVR has received from Fitch Ratings during the 1H 2019 an A- rating with a stable outlook and has maintained the A3 rating that the company had received from Moody’s Investor Services, which is equivalent to A-. Additionally, for FY 19, the company is expecting operating EPS to be in the range of 16.9 cents and 17.1 cents, which reflects the growth of 3 to 4 per cent and has confirmed the distribution guidance of 11.6 cents per stapled security, which is a growth of 5 per cent. Meanwhile, MGR is trading at a low P/E of 7.97x. The stock is trading at the price of level $2.74 with the market capitalization of ~$9.91 bn.

 Lendlease Group (ASX: LLC)

Engineering Business Affects the Profit during 1H FY 19:  Lendlease Group (ASX: LLC) for the first half of FY 19 has reported 96% decline in the profit after tax to $15 million (consolidated numbers) on the back of the underperformance of Engineering projects. As a result, the company is expected to incur future restructuring costs in the range of $450 million to $550 million pre-tax as per the preliminary estimate since the company has now decided to close its Engineering and services business. During 1H FY 19, Funds Under Management (FUM) grew 20% to $34.1 billion and the development pipeline grew 31% to $74.5 billion. The company has available liquidity of $2.1 billion and gearing is also at the mid-point of the 10%-20%. Further, LLC expects FY 19 to be skewed to the second half of FY 19 driven by the substantial number of residential apartments that are due for completion. Meanwhile LLC stock has risen 3.58% in the last three months as on March 22nd, 2019 and is trading at a P/E of 18.30x. The stock is trading at the price of level $12.15 with the market capitalization of ~$6.81 bn.

Stockland (ASX: SGP)

Additional Disinvestment of $143 million Retail Assets: Stockland (ASX: SGP) continues with its non-core retail divestment strategy and will be divesting $143 million worth of additional two retail assets combined. The company is divesting the Stockland Cleveland shopping centre in Brisbane and the Yoowong retail and commercial centre in Brisbane. Both the transactions are expected to close by 30 June 2019. On the other hand, for the first half of FY 19, the company has reported 6.7% decline in the funds from operations (FFO) to $407 million and 6.9% decrease in adjusted funds from operations (AFFO) to $352 million. SGP for 1H FY 19 has reported 56.2% fall in the statutory profit to $300 million on 1H18 on the back of losses incurred on financial instruments, reduced increase in valuation of commercial property versus 1H18, change in the fair value of retirement living and incurred a tax expense compared to a tax benefit in 1H18. Moreover, for FY 19, SGP expects FFO per security growth to be approximately 5 per cent, which is at the lower end of the company’s forecast of the range 5%-7% due to softer market conditions. However, the company has reaffirmed 2019 DPS outlook of 27.6 cents, which is a 4% rise on FY18. Meanwhile SGP stock has risen 2.98% in the past three months as on March 22nd, 2019 and is trading at a P/E of 14.39x. The stock is trading at the price of level $3.80 with the market capitalization of ~$9.07 bn.


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