SCG – Citi rates the stock as Neutral

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The company has acquired 50% of Eastgardens for $720m and has flagged significant redevelopment potential for both retail and mixed use. Citi considers the acquisition strategically appealing, noting opportunities in a growing catchment. Pricing appears fair.

The broker envisages reduced capacity for the $700m buyback program and suspects Eastgardens may need to deliver strong sales growth or attract development returns to be more appealing than a buyback at the recent share price. Neutral rating and $4.19 target maintained.

Sector: Real Estate.

Target price is $4.19.Current Price is $4.52. Difference: ($0.33) – (brackets indicate current price is over target). If SCG meets the Citi target it will return approximately -8% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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