Sunland Group Limited (ASX: SDG) is engaged in construction and residential property development. It was officially listed on ASX in Feb 1995. On 24th May 2019, by release, the company announced that it has entered into an unconditional contract to sell a 6.053 Ha (hectare) greenfield site in Ingleside, which is 27 kms away from north-east of Sydney for a consideration of $16.5 million plus GST. Sunland bought the amalgamated site in 2016, located at 169 and 169a Mona Vale Road in Ingleside. The off-market transaction indicates a profit after tax amounting to $4.9 million, which will be realised by the company in FY20 subsequent to the settlement of the sale.
The management communicated that the sale presented an opportunity for the whole group to achieve an admirable return on its strategic landholding. The company has been maintaining a substantial landholding in Ingleside and the growing northern beaches region, where there is a robust demand for reasonably priced master planned communities and boutique housing.
As per the release dated 24th May 2019, the company reported that it bought back 10,848,813 shares for the consideration of $17,117,750 in accordance with the daily share buy-back notice. The remaining number of shares to be bought back by the stands at 4,363,257.
When it comes to operational performance, the company reported residential housing value of $158 million, which reflects 23% of the unsettled lots value by segment. The residential apartments comprised 64% of the unsettled lots value by segment and stood at $440 million.
Separately, moving to the financial performance of the company. SDG reported NPAT of $11.5 million in H1 FY19 compared to $26.6 million in H1 FY18 and EPS of 7.7 cents. The underlying contribution from operations after tax stood at $20.5 million. The company pointed out that NRV write down follows a strategy to reallocate capital from regional markets to core operating markets. The group consolidated net tangible asset per share stood at $2.48 compared to $2.47 in FY18. The results were affected by a net realisable value write-down of $9.0 million after tax at Bayside, Townsville Project. SDG is in a good position to capitalise on the delivery of strategic sites, mainly in Southeast Queensland and across the group’s substantial multi-storey development portfolio.
Sunland’s gearing stood at 22% debt to asset and 32% debt to equity. On the balance sheet front the company reported $33.6 million in cash and $192.9 million in undrawn working capital.
On the outlook front, SDG is focused on delivering a stable, consistent performance during the period of adjustment and consolidation in the market cycle. Additionally, the company is focused on establishing itself for the next phase of the cycle, and the timing of the future project release is subject to the approval of the Development Application. The group’s mid-rise portfolio will continue to expand as part of an integrated housing strategy that will allow the company to mitigate risk via staged delivery.
At market close on 24th May 2019, the stock of Sunland Group Limited was trading at $1.700, with a market cap of $245.37 million.
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