GPT Group shares (ASX: GPT) have been trading in a well defined range over the past month or so, with the A$4.40-4.60 band proving something of a comfort zone. It has been a difficult year for GPT bulls, who have seen the stock fall 17.22% YTD, yet there are some corners of the market that are looking at the selloff as value.
The point that selling accelerated most recently is clear to see on the 1 year chart above, as some stabilisation into early August gave way. GPT was changing hands ~$5.25 before its interim result in mid-August, then drifted into the mid-$4s even as the operational story held up. At today’s close the stock sits at a discount of roughly 19 per cent to its net tangible asset backing of $5.61 per security, and the guided full-year distribution of 24.5 cents implies a forward yield of 5.37%. For income and value investors, that combination is hard to ignore.
Funds from operations came in at $338.8 million, or 17.7 cents per security, with statutory net profit of $400.1 million helped by a $45 million portfolio valuation uplift. Like-for-like net property income rose 5.8 per cent, overall occupancy held at 97.6 per cent, and assets under management climbed to $41.6 billion.
Retail occupancy was near 99.8 per cent, logistics close to 99 per cent, and office delivered like-for-like income growth of around 8 per cent with positive leasing spreads across all three segments. Management reaffirmed full-year FFO guidance of about 35.4 cents per security alongside the 24.5 cent distribution, and the funds platform attracted an oversubscribed $697 million equity raise for its wholesale shopping centre fund.
The bear case however points to GPT Management Holdings, the management arm, reporting a 26.1 per cent fall in revenue to $152.2 million and a 68 per cent drop in net profit to $14.1 million, with its dividend suspended. Office remains the clearest structural risk, with vacancy elevated relative to retail and logistics even as leasing activity improves.
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What Next?
The average price target of $5.43 suggests a perceived upside of close to 20 per cent from the latest close, although the technical setup looks quite different. The chart points to a recent bounce within a negative trend, with GPT trading below its 50-day average at $4.72, which itself sits below the 200-day at $4.88. The CCI has recovered from a downside stretch into neutral territory, while the ADX near 30 but falling points to a downtrend whose momentum is fading rather than a confirmed reversal.
Yesterday’s session did bring a test of the 30 day SMA as the nearest term momentum marker, with the close at A$4.52 exactly at the level, having tested an intraday move higher at A$4.54. The current rangebound trading is not showing clear signs of breaking just yet, although a clear break through the 30 day, and the mini resistance at A$4.55 could be the first steps towards an upper boundary test.
Underperforming the ASX 200 by 17% YTD does not scream buy, and we would want to see clear signs of a reversal of trend rather than trying to pre-empt a move. There may well be value here over time, yet for now at least, this looks like a battle for longer term direction that has yet to be decided.
