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Goodman builds 9pc profit boost

Lex Hall  |  17 Aug 2018Text size  Decrease  Increase  |  
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Industrial landlord Goodman Group has posted a 9 per cent increase in annual operating profit and expects to maintain that momentum by seizing on rapid changes in technology and supply chains.

Goodman Group (ASX: GMG) today reported a full-year operating profit of $845.9 million, up 9 per cent on FY17 and operating earnings per share of 46.7 cents, up 8.3 per cent, having forecast EPS of 46.5 cents up 8 per cent.

The group forecast operating profit for FY19 of $913 million with operating EPS of 50 cents, a rise of 7 per cent on FY18. It forecast a 7 per cent increase in distributions in FY19 to 30 cents, up for 28 cents in 2018.

containers supply chains Goodman

Having land in strategically important sites is paying off for Goodman

Morningstar analyst Tony Sherlock has had a positive view of Goodman for several years, and is revising his forecast in the wake of the result. His current fair value estimate is $8.90. At 12.30pm, Goodman was up 2.8 per cent at $10.34.

Goodman says it has a global development pipeline of more than $10 billion in areas that it says are designed to capitalise on growth in ecommerce, and in advances in technology and supply chains, which it says are driving customer demand.

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Sherlock applauded the result and cited Goodman's long-term approach as key to its industrial development succces.

"They're in great sites. They're getting strong rental growth, and building and selling and getting high prices, which are buoying their earnings and they think that's going to continue for a while longer," Sherlock said.

"Having land in strategically important sites is really working for them. These take time but once they're built everyone wants them, and it's very hard for rivals to replicate what they're doing.

This strategy had appealed to strategic investors, including sovereign wealth funds, Sherlock said.

"Several of the world's biggest sovereign wealth funds, including the China Investment Corporation and the Singapore Investment Corporation, are using Goodman as a conduit to investing in this industrial asset class."

Goodman could face risks in the form of higher interest rates or a drop in online retail sales, but Sherlock sees this threat as minimal as the company has so little debt.

Goodman Group highlights:

  • Operating profit of $845.9m, up 9pc on FY17
  • Operating EPS of 46.7c, up 8.3pc on FY17
  • Total distribution of 28c per stapled security (DPS), up 8.1 on FY17
  • Like-for-like net property income (NPI) growth of 3.2pc
  • Occupancy rate of 98pc across the portfolio
  • Weighted average lease expiry (WALE) of 4.8 years

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Lex Hall is a Morningstar content editor, based in Sydney.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is senior editor for Morningstar Australia

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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