In today’s daily we have covered stock research on Dexus Property Group. To view 3 Media Stocks with 6%+ Dividends click here

S&P 500 was up by 2.85 points or 0.15% to 1878.48 on Friday. The Dow Jones industrial average rose 32.37 points or 0.2 percent, to 16,583.34, the S&P 500 gained 2.85 points or 0.15 percent, to 1,878.48 and the Nasdaq Composite added 20.374 points or 0.5 percent, to 4,071.86. Apple was the biggest drag on both the benchmark S&P 500 index and the Nasdaq 100 on news that it is close to paying a record $3.2 billion for Beats Electronics, an expensive foray into music streaming and headphone gear.

Healthcare stocks rose, with shares of Merck  up 0.7 percent at $55.21 a day after U.S. health regulators approved a blood-clot prevention drug developed by Merck for use by patients who have had a heart attack or who suffer from blockages in the arteries of the legs. Consumer discretionary shares also lifted the market, with the stock of Gap Inc up 3.3 percent at $40.52 after the apparel retailer reported upbeat April sales and gave a profit forecast that surpassed Wall Street's expectations.


S&P 500 Daily Chart   (Source – Thomson Reuters)
 
S&P ASX 200was down by 16.0 points or 0.29% on Friday and closed at 5460.8 points. Origin Energy and Santos have downplayed fears reiterating that their LNG facilities in Queensland are on track and on budget for next year. Iron Ore price was last trading at US$102.70 on Friday which might be impacting treasury’s forecast for the coming budget.

Genworth a major player in the mortgage insurance market is due to float 40% of its Australian business in a $2 billion deal on May 20. Charter Hall group is preparing to offload nearly $150 million worth of industrial assets. TopShop owner Sir Philip Green has taken a 25% stake in the flash sale website OzSale.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Dexus Property Group  (DXS)
 
Dexus is a major property owner, developer and manager. It owns a large, high grade office portfolio and a smaller industrial portfolio in Australia. It also manages properties for third party investors. Dexus was formed with the merger of Deutsche Office, Industrial and Diversified Trusts. Management in internal as opposed to external like some peers.

Dexus’s first half funds from operations increased 6% to AUD 4.04 cents per security on the back of relatively strong income growth from the office portfolio, distributions from the Commonwealth Property Office Fund or CPA and the security buyback. Despite the good result which was in line with our expectations and recent guidance, we remain cautious because of the weak fundamentals in office and industrial markets.


Source - Dexus

Net tangible asset or NTA backing increased AUD 3 cents to AUD 1.08 per security on rising property values but dilution from the CPA acquisition will see NTA fall back to AUD 1.06. Further increases in property values are likely because of strong demand from large global investors. Strong investor demand contrasts with weak operating conditions.


Dexus Daily Chart  (Source - Thomson Reuters)
 
Generally, office and industrial markets are suffering with soft tenant demand, high vacancies, rising supply and high tenant incentives. The office portfolio performed well in difficult conditions with the like for like income rising 3.8% on contracted rental increases and leasing success. We believe the stock is slightly overvalued at its current price and would review the stock at a later date.

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