Strong Results for Stockland
Strong Results for Stockland
Stockland, the country’s largest house and land developer, is a bellwether for homebuyer sentiment. It owns and develops popular housing estates such as The Gables in Sydney’s north-west and Cloverton in Kalkallo on Melbourne’s northern fringe.
On Thursdays, Stockland recorded it’s strongest half-year performance in four years with 3835 net sales and boosted settlements 44 per cent to 3101 due to increased production as the company brought forward staged releases to cater for demand.
Stockland said its ability to increase house-and-land production in response to a pandemic-driven desire for space and the return of investor and upgrader buyers will help it respond to demand and maintain a 13 per cent share of a sharply rising market.“The six months has been a significant improvement on the last six months of FY20,” managing director Mark Steinert told The Australian Financial Review. “And for us, it’s pleasing to see improvement across the whole portfolio.”
Mark Steinert, the managing director and chief executive, said federal and state government policies – JobKeeper, JobSeeker and HomeBuilder – kept people employed and the economy on track during the global pandemic. “Credit has got to go to the government … it’s the very specific nature of those policies that kept people tied to their jobs. And to the state government policies to ramp up infrastructure, cut red tape and improve the planning system.”
The residential division’s result supported fairly robust group earnings in light of the current market conditions with Stockland reporting increased funds from operations to $386 million, or 16.2¢ per security, a 1 per cent gain and above analysts’ expectations.
Richard Jones, an analyst from JP Morgan said the result was above his forecast due to materially lower retail rent assistance; better residential performance and the sale of non-core retirement assets. “Overall the result was a significant beat.”
“Residential sales were unsurprisingly strong, the balance sheet is in good shape and the trust is performing pretty well.”
Stockland predicted more than 6000 residential settlements this year – up from 5878 last year – at an average margin of 19 per cent. It restocked its land bank with more than 9000 lots and increased production by 1800 lots during the period in response to the extra demand. Andrew Whitson, the country’s residential head said Stockland is uniquely positioned to take advantage of a structural shift in customer preferences for lower-density housing in quality communities. “We were able to respond in an agile manner to improving market conditions.”
The developer, however, remains cautious as Stockland bumps up against capacity constraints. Costs are up, particularly insurance and the settlement of 70 townhouses is pushed into the next reporting period as their completion was delayed by production slowdowns.
Stockland said FFO would fall as much as 12.4 per cent from last year to between 16.3¢ and 16.9¢ per security from January till June compared with 18.6¢ a year earlier, as residential property picked up even while commercial property remained challenged.
It reported a near-halving in pretax profit to $578 million and a 38 per cent slump in net profit to $616 million. The shares closed down 13¢, or 2.9 per cent, at $4.40. “The 20 per cent premium to net tangible asset value it is trading on makes it a material outlier to its peers who are all at discounts,” Mr Jones said.
Over the period Stockland increased its industrial and logistics assets to 31 per cent from 28 per cent of its overall portfolio at the end of June. Its logistics portfolio had an occupancy of 96.3 per cent and a weighted average lease expiry of 4.8 years. The company still has more retail property than it wants to own. They have a target weighting of 33 per cent and the figure stood at 39 per cent as of December. Rent collections also stood at about 90 per cent.
References:
- Housing demand, retail recovery boost Stockland’s earnings
by Nick Nichols
- Stockland boosted by retail bounce-back, surging land sales
By Simon Johanson and Carolyn Cummins
https://www.smh.com.au/by/simon-johanson-hve7g
- Stockland reports strongest sales result in four years
by Micheal Belby