Villa World Limited

Strong Performance in FY 2018, NPAT stood at top end: Villa World Limited (ASX: VLW) managed to generate net profit after tax or NPAT amounting to $43.6 million in FY 2018 which implies the YoY growth of 15%. The company reported its NPAT in the top end of the guidance (updated) as it stated that its NPAT is expected to be between $42 million-$44 million. The company managed to report 1,678 lot sales in FY 2018 which implies the YoY growth of 39%.


VLW’s Sales (Source: Company Reports)

Villa World witnessed average sales rate of 140 per month reflecting a rise as compared to FY 2017 in which the average sales rate was 101 per month. This rise was well-supported by the robust contribution from the flagship projects which were released in FY 2017 as well as Lilium.

The cash flow from the operating activities of Villa World remained strong in FY 2018 which has supported the company to work for the growth opportunities as well as it also helped in the reinvestment in the business. However, the strong cash flows helped the company from the dividend perspective as well as in maintaining the robust balance sheet.  
 
What VLW’s Management Expects: The management of Villa World expects to remain committed to the operational delivery as well as cash settlement with respect to the carried forward sales. It also plans to achieve further progress in regard to the strategy which focuses on growing joint venture arrangements and the gross margin for FY 2019 has been anticipated to be between 24%-26%.

Also, Villa World is anticipating statutory profit after tax amounting to around $40 million in FY 2019 if the residential market conditions remain favourable.Moreover, in FY 2019 the company also has plans to announce strong dividend.   
Stock Recommendation: Moving Average Convergence Divergence or MACD has been applied on the daily chart of Villa World Limited and default values were considered. As per the observation, the MACD line is about to cross the signal line. Therefore, predicting the stock price movement at this level is not advisable. Therefore, we maintain our “Hold” rating on the stock at the current market price of A$1.950 (down 2.256% on November 15, 2018).

Cedar Woods Properties Limited

Progress in the Projects and Sales Aided CWP’s September 2018 Quarter: Cedar Woods Properties Limited (ASX: CWP) witnessed robust performance in September 2018 quarter because of the strong momentum in the sales as well as progress witnessed in the crucial projects. The company’s pre-sales amounted to $376 million which implies the YoY growth of 21%. The management of the company stated that its portfolio which is being diversified on the basis of product type, geography as well as price point saw robust returns even though it has substantial portion of the projects in WA. The trading conditions in WA is not much favourable.

The management of the company also reflected positive views with respect to the South Australian as well as Queensland conditions and stated that the projects in these markets are commencing. The top management of the company believes that it has substantial projects which are under development. Also, the projects would now be coming online in FY 2019 as well as in FY 2020 which could help the company’s profits.  

What Investors Can Expect From CWP: Cedar Woods Properties generated total revenues of $239.7 million in FY 2018 which implies an increase of 7.8% as compared to the previous year. The management of the company is having a favourable outlook for the performance. They believe that housing sector of Australia is helped by the lower interest rates as well as growth in the population in the key markets of the company.


CWP’s Revenues and Net Profit in FY 2018 (Source: Company Reports)

The management also stated that favourable conditions were witnessed in the South Australia as well as Queensland and the company has witnessed robust demand for the projects which are active. According to them, the earnings for FY 2019 would be helped by the numerous new projects.

Stock Recommendation: A technical indicator, Moving Average Convergence Divergence or MACD, has been applied on the daily chart of Cedar Woods and we have considered default values. After careful observation, we saw that the MACD line is about to cross the signal line. Therefore, it is still early to anticipate the stock price movement. Therefore, we maintain our “Hold” rating on the stock at the current market price of A$5.100.
 
 

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