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On 20th February 2019, Sunland Group Limited (ASX:SDG), which is an Australian based real estate company having a national portfolio of $3.2 billion, declared its FY19 Half year results. The company's result was not much exciting as compared to the 1H18 numbers. The underlying net profit after tax (NPAT) decreased by 23% from $26.6 million in 1H18 to $20.5 million in 1H19. The statutory net profit after tax decreased even more. It fell by a massive 57% from $26.6 million to $11.5 million. The decline in statutory net profit had a direct impact on the earnings per share (EPS) of the company which declined by an equivalent magnitude of 57% from 17.7 cents in 1H18 to 7.7 cents in 1H19.
The net realised value (NRV) of $9 million has also been written down by the company in order to follow a strategy to reallocate the capital from regional markets to core operating markets. The NRV was NIL in 1H18. The company stated this would also impact the previously given guidance by the company and the targets may not be achieved after the current adjustment.
The sales volume has also been hit from 179 in 1H18 to 170 in 1H19. The management also stated concerns regarding the property market in Australia pointing out to the significant reduction in foreign purchasers and local investors which eventually impacted the sales volume. On the operational front, the company generated revenue of $203.7 million from 270 property settlements in 1H19 which is $40.5 million less than the $244.2 million revenue generated in 1H18 from 336 settlements. Significant contributors to the revenue were residential housing settlements at The Lakes Residences, Shea Residences, 18 Macpherson Street (NSW) etc.
However, despite average numbers, the company declared a fully franked interim dividend of 4 cents per share which is to be paid on 21st March 2019. The ex-date and record date for the dividend is 7th March 2019 and 8th March 2019 respectively. The dividend is 1 cent lower than the 1H2018 interim dividend of 5 cents per share.
The management of the company also gave the future outlook and is focused on establishing the Group for the next phase of the cycle and strategically positioning the company for the next growth period. This will include identifying opportunities for counter-cyclical portfolio replenishment after looking at the market conditions for the conservative delivery of the portfolio. The management is also looking to follow the same conservative approach on the balance sheet as well and has also shown faith in their capital management initiatives, strong balance sheet, and access to capital.
After posting ânot so good' financial numbers, the stock price is almost flat amid the result announcement and closed at a minor gain of A$0.02 at A$1.5 as on 20th February 2019, compared to the previous day's closing of A$1.48. The expectation of these results might have already been discounted by the market participants; therefore, the stock had already fallen by more than 3.5% in the last five days. From the past one year, the stock price has fallen by almost 15%.
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