The AGM of AVEO GROUP (ASX: AOG) was held today on November 14, 2018, where the performance of the company was highlighted by the chairman Seng Huang Lee and the CEO Geoff Grady.
A comparative analysis was made in regard to the financial outcome. There was an increase in the PAT by 17%. The statutory profit after tax got increased by 44%. The main factor which influences the statutory profit was the air value uplifts in the retirement portfolio as well as the sale of Gasworks. The statutory earnings per share also increased by 43%. The growth seen in the performance was taken care by the increase in Group’s retirement profit mainly by delivering 506 new units. Newstead achieved margins beyond its expectations. The EPS increased by 16% which is equivalent to 22 cents. There is an increase in the net asset of the company by 16%. The NTA per security also increased by 16%.
Over the period from FY14 to FY18, the company has achieved all its strategic goals and was able to maintain a positive growth in terms of earnings. This also indicates that the company was able to understand and also addressed the expectations of its customers. The board members of the company are also looking at the factors that are impacting the current discount to NTA. The current discount to NTA is balanced by strong medium to long-term growth predictions for the sector. They appointed Merrill Lynch Markets (Australia) Pty Limited as a financial advisor for its strategic review of its retirement business. The strategic view targets to close the value gap in between the price of the listed securities of AVEO and its underlying value of retirement properties. As per the board, its retirement business is being undervalued significantly and they are traded at a discount of 52% to net asset value. There might be a possibility that the review needs an introduction of the capital partners into the retirement business.
The six key sustainability pillars were also highlighted. These include Communities, Residents, People, Environment, Economic and Governance for which the company is accountable for any impact. The company has established a sustainability committee who will be taking care in the formulation of the strategy, policies, and also address the course of action required in order to achieve the company’s sustainability objectives. In FY2019, the company has planned to focus on each of its sustainability pillars by defining measurable matrices and goals for them. Initiatives have been taken for the same.
In the AGM, the confidence about its future was also brought into the light. The chairman stated that for the past 5 years, Aveo has not only evolved as a leading, innovative retirement group but has also established itself as a practical healthcare organization. The company has a strong position in Australia and it has established itself as a capitalized company. It considers the well-being of its residents, the most important priority.
Through the resale of the existing units to the new residents, the company was able to generate profits. As a result of adverse media impact, there was a fall in the sales in Q1 of FY2018. This also impacted the portfolio sales rate to go down from 10.9% to 7.5%. The company expects that in FY2020, return from sales will be in between 10% to 20%.
At present, the market price of the share is A$1.720 (AEST: 3:46 pm). It has gone down by -8.753%. It has a market capitalization of A$1.09 billion and PE ratio 2.98x.
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