Tag: GMG

Morgan Stanley estimates a possible -7-17% decline in the valuation should coronavirus materially affect the business.

UBS believes there are enough structural developments to overcome global economic uncertainty. Going forward, the company’s portfolio strategy should mean a high level of sustainable performance fees.

Goodman Group’s investor day presentation has left the broker’s investment thesis intact. Demand remains strong globally, and data centres and cold storage are becoming increasingly important tenant categories.

Goodman Group has reaffirmed FY19 guidance of growth in operating earnings of 9.5% and distribution growth of 7%. Credit Suisse notes the update highlighted the global demand for logistics space within the proximity of consumers in urban locations.

Management has reaffirmed FY18 guidance for earnings per share of 46.5c and an intention to maintain low gearing levels. The key takeaway from the investor briefing, in Deutsche Bank’s view, was the buoyant state of the industrial property market, in particular in the US.

First half results beat Morgan Stanley’s estimates. Execution of portfolio rotation and capital management has allowed the company to deliver growth while improving the quality.

UBS observes Goodman Group is a well-run business and has sustainable growth with a conservative capital structure in a sector with strong tailwinds. However, the valuation is considered full and there is no short-term de-rating in sight.

Macquarie observes development is delivering all-time record returns and the market is concerned about what happens when the cycle returns to normal.

A thorough analysis of listed property owners in Australia has led to several non-consensus views at Citi. The analysts are of the opinion the Sydney cycle for offices has a longer life ahead than most are willing to consider.

The company hosted an asset tour in Sydney. Macquarie observes, given the company’s significant relationship with Amazon globally, it still appears well-placed to satisfy some of the requirements.

There were no new catalysts to get excited about, Morgan Stanley observes from the quarterly update, and the company appears in good shape to deliver superior growth in the next few years.

Should Amazon move into the Australian market, as has been widely speculated, Credit Suisse observes the potential benefits for Goodman Group are clear.

Goodman’s quarterly update saw a reiteration of FY17 guidance, in line with the broker’s forecast. The broker nevertheless believes management is being conservative due to the earnings dilution from asset sales in the rotation strategy given a rising asset value environment.

The strategy briefing suggests to UBS that key business trends are on track. The company continues to re-allocate capital from the UK and Australia to the US. The UK land bank worth GBP300m is expected to reduce by 50% over the next two years.

UBS believes the stock attracts a premium valuation which does not give enough credit for the cyclical nature of funds management and development earnings.

The broker suggests it was not Goodman’s actual result which drove the share price 6% higher yesterday, it was management’s positive outlook on the development and management businesses. And forecast 30% growth in assets under management.

The company made solid progress over the March quarter and guidance has been reiterated. Development pre-commitments are falling but, while warranting attention, the broker is less concerned given the context of Goodman’s regional diversity and focus on reducing gearing.

The company has upgraded earnings guidance to 7% from 6% for FY14. The long-term target of 6% was reiterated but Citi expects there will be years when they are able to improve on that figure.

GMG – BA-Merrill Lynch rates the stock as Underperform, High Risk

UBS believes that, while Asia is the driver of development-led earnings growth, the European businesses remain a major contributor to all parts of Goodman’s business. The broker remains supportive of the business model but thinks the market is paying a full price for the development pipeline and FUM growth.

UBS rates the stock as Neutral –

UBS rates the stock as Buy –

FY12 earnings were in-line with the broker, who notes European development earnings were the main driver of FY12 growth. The FY13 guidance was pretty much what the broker was expecting and represents 6% growth on FY12.

Goodman has sold its balance sheet interest in the $550m interlink project in Hong Kong and the $91m profit on sale was materially higher than Macquarie had expected.

Target $0.82 (was $0.81). According to RBS, systematic underinvestment in industrial property and Goodman’s increased exposure to markets with strong industrial production outlooks supports the growth outlook for the company.

Macquarie has returned from research restriction with an Outperform rating. The price target has been set at $0.73.

Target $0.79 (was $0.60). Somewhere between late February and yesterday the stockbroker had decided to drop coverage on Goodman Group, but that has been corrected now and RBS officially returns with a Buy rating in combination with a $0.79 price target.

GMG is one of the sector’s most earnings sensitive stocks, UBS says, and its ability to secure third party funding is key.

Last week Goodman Group announced a $1.8bn capital raise, a $0.2bn JV with CPPIB and extended $4.1bn in debt across the group.

The broker anticipates the company cutting its dividend to bring it into line with cash earnings, which it suggests would be the correct course of action but that would offer confusing signals to investors given earnings should grow in FY09.

As part of a sector downgrade of earnings and valuation (reflecting tight credit markets and poor economic outlook) Citi has lifted Goodman’s risk rating to High from Medium and slashed the target price to $2.95 from $4.62.

Citi has downgraded Goodman Group to Hold from Buy following after a recent rally in the share price. Its target price is unchanged at $4.60.

Citi says GMG’s launch of its Japanese logistics fund for wholesale investors will have a negligible impact on earnings and says the company has more serious issues to address, particularly its gearing and the sale of its UK logistics fund.