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REPORTING SEASON: Stockland (SGP)

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Figure 1: Stockland 12 month chart

 

Stockland (SGP) profit surges on favourable property revaluations

– Property group Stockland (SGP) posted a 71% rise in annual profit to $903m. The result was driven by $297m in favourable revaluations of its Commercial Property assets and $80m from the sale of its stake in Australand. Underlying profit (which strips out one-off items) rose by an in-line with consensus 9.4% to $608m.

– Its three most important portfolios in order of contribution to earnings are Commercial Property, Residential and Retirement Living. All three business units delivered growth in earnings. Commercial property (which includes 42 retail centres, 24 business parks & 10 office buildings) accounted for 70% of operating profit. The retail portfolio (the biggest earner in the Commercial unit) recorded the strongest specialty sales growth in four years of 7%.

– Residential made up 23% of earnings to $166m, with profits up 73.5%. SGP settled 5,876 lots over the year – a 12.6% rise on FY14. SGP is the largest residential stgeloper in Australia. The low interest rate environment and substantial demand has been helpful. Retirement Living generated just 6.5% of profit; however has grown by 19.9% over the year. SGP is one of the largest retirement living operators in Australia, with over 9,300 units and another 3,400 units in the stgelopment pipeline. Two non-core villages were sold, while eight were acquired in SA – a strong market for retirement living. Improved sales are likely as an ageing population continues to downsize.

– A $0.12/security final distribution was declared, payable to eligible investors on 31 Aug 2015. SGP has a 5.7% yield, although distributions are unfranked meaning payments are yet to be taxed. Looking ahead, SGP expects to lift underlying profit by 6-7.5% over the year ahead.

 

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Steven Daghlian, Market Analyst,