GPT Group Acquires Five Logistics Properties; News Good Enough to Abate the Double Top?

  • May 27, 2019 AEST
  • Team Kalkine
GPT Group Acquires Five Logistics Properties; News Good Enough to Abate the Double Top?

GPT Group (ASX: GPT) is a real estate company growing rapidly in civil construction, infrastructure, healthcare and manufacturing. The company has several projects under execution, and some are in the pipeline. The portfolio of the company includes shopping centres, offices, business parks etc.

On 27th May 2019, the company announced the acquisition of five logistics properties in Sydney for a total consideration of $212 million. These assets cover a total area of 88,200 m2 and have an initial passing yield of 5.4% with 8.6 years of combined weighted average lease expiry (WALE).

The group has also secured Heads of Agreement for a ten-year lease over a logistics development at Berrinba, Brisbane, covering 20,500 m2. It has also started a 26,000 m2 logistics development at Truganina in Melbourne’s west.

Bob Johnston, CEO of the company commented on the acquisitions and he believes that the said acquisition and developments are consistent with the company’s strategy to expand its position in the logistics sector. Further, he also highlighted that the assets purchased are well situated to access the transport links.

The company also announced a change in the director, Robert William Johnston’s interest. He had acquired a total of 585,864 performance rights on 24th May 2019.

On 11th February 2019, the company released its FY18 annual performance which was inline with the guidance provided in October 2018.

On 16th January 2019, the company released to the exchange about its 50% stake disposal in the MLC centre.

Technical Outlook

On 12th March 2019, the stock had made its all-time high at A$6.32 and within a few days, made a slight correction to A$6.07. It again rallied to its previous high levels at A$6.29 and again retraced back. Within a few days, the stock breached its previous support level, which completed the formation of the double top price pattern.

The double top price pattern is a bearish reversal pattern, which means the completion of the pattern tends to reverse the prior uptrend to downtrend. The pattern assumes a high significance when the pattern unfolds at the top of the up-trend.

Daily chart of GPT Group (Source: Thomson Reuters)

In a Double top pattern, initially the price rallies to a specific high, which marks the first top of the pattern (A$6.32). From this high, the stock price drops due to selling pressure, and the stock starts to decline to lower levels and halts at a support level from where the buying resumes (A$6.07). This buying is enough to push the stock back to the previously marked high levels (A$6.29). From here the selling again kicks in, and this time it intensifies and breaks the previous support level, and the pattern gets completed which sets the stock for a downtrend. The target for this downtrend is the difference between the peaks and support level, subtracted from the neckline(support).

In the case of GPT Group, after the breach of A$6.07, the stock fell consistently and fell beyond its technical target of around A$6.07 and it made a low of A$5.61. The stock stayed around these levels for a few days and then started making bullish candles (as indicated in the chart), which abated the sell-off and an indication for change in the selling pressure. Post that, a swing rally was witnessed, and the stock price made a high of A$6.06, which is around the resistance levels and started to decline. Until this resistance gets breached, it would be difficult for the stock to make an upside move. On the lower side, it has strong support around A$5.6 – A$5.61.

Stock performance

The company has a market capitalisation of A$10.94 billion, and the stock had touched a 52-week high and low of A$6.32 and A$4.77 respectively. The stock decreased by 1.32% and closed the day’s trade at A$5.98 as on 27th May 2019. The last one-year return of the stock is 19.7%, and the YTD return stands at 14.1%.


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