Cromwell Property Group

CMW’s FY 2018 EPS Outpaces Guidance: Cromwell Property Group (ASX: CMW) had recently conducted the annual general meeting for FY 2018. The company’s FY 2018 EPS was supported by continued recycling as well as reinvestment strategy. The AGM presentation of the company demonstrated that the company is having robust balance sheet and it also possesses substantial cash, low gearing as well as long debt tenor.  The company is working towards the activities which would support it in the growth with regards to operating profit with the help of ongoing asset recycling initiatives as well as through the use of its present liquidity. The company ended FY 2018 by generating operating profit amounting to $156.8 million in FY 2018 which implies the YoY growth of 3% on the YoY basis.


CMW’s FY 2018 Financial Highlights (Source: Company Reports)

The company’s gross margins witnessed a rise in FY 2018 on the YoY basis. In FY 2018, the gross margins of CMW stood at 88.2% while in FY 2017 it was 86.9%. Moreover, the company’s return on equity happens to be at decent levels as it is above the industry median. The company’s return on equity at the end of FY 2018 was 11.4% while the industry median was 11.1%.

CMW Eyes for Diversification: The AGM presentation of Cromwell Property Group had stated that, with respect to economy of Australia, the slowdown with regards to the economy of China, trade wars as well as other geopolitical risks might impact broader Australian economy. The company had highlighted its strategy which focuses on its exposure beyond the Australian boundaries for the purposes of diversification.  

However, with regards to the economy of Europe, the company had done strategic investments in the European markets in order to diversify and reap the benefits which would occur from the robust demand with regards to the commercial real estate as well as from the recovery of the European economy. 

Stock Recommendation: On the daily chart of Cromwell Property Group, Moving Average Convergence Divergence or MACD has been applied and default values were considered. After observation, it was witnessed that the MACD line has crossed the signal line and it is trending in the upward direction. This signifies that the stock might encounter bullish momentum.

Based on the above-mentioned parameters, we maintain our “Buy” rating on the stock at the current market price of A$1.010 per share. 
 

Scentre Group 

Occupancy More Than 99.5% In Third Quarter: Scentre Group (ASX: SCG) had earlier reported operating update for Q3 which ended in September 2018. The top management of the company had stated that they have witnessed occupancy of more than 99.5% throughout the portfolio reflecting the high-quality retail space is encountering demand. The demand is being witnessed for the high-quality retail space which is related to increased traffic flow.

The management of Scentre Group had also stated that they have managed to unfold redevelopment works amounting to over $1 billion throughout the four states of Australia in the time span of three months ended September 2018. 

SCG’s Operating Performance (Source: Company Reports)

Expected Performance for FY 2018: As depicted in Scentre Group’s presentation for September 2018 quarter, the company believes that it would achieve growth in the FFO of circa 4% in the span of twelve months which would end on December 2018.  The company had also provided information related to the distributions for FY 2018.

In FY 2018, the company is expected to give the distribution of 22.16 cents per security which reflects the 2% rise. 

Stock Recommendation: On the daily chart of Scentre Group, Moving Average Convergence Divergence or MACD was applied. For the purposes, we have used the default values. As per the observation, the MACD line has crossed the signal line and is moving in the upward direction. This represents that the stock might witness bullish momentum moving forward. In the time period of previous three months and one month, SCG had delivered the return of 7.65% and 3.03%, respectively.

On the backdrop of the stated factors, we maintain our “Buy” rating on the stock at the current market price of A$4.100 per share.   
 

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