Stocks’ Details

Garda Diversified Property Fund

 
Rise in AUM predominantly on the back of one-off event:Garda Diversified Property Fund (ASX: GDF) had reported its numbers for the half year ended 31 December 2018. The Fund generated a net profit of $12.9 million during the half year, an increase of $8.2 million compared to the prior half-year profit of $4.7 million. The primary reason for this increase in profit is due to the settlement of the litigation matter with Herron Todd White (HTW) for which the Fund received $8.0 million in cash proceeds.
 
The Fund’s total assets at 31 December 2018 increased to $319.5 million from $290.6 million at 30 June 2018, an increase of $28.9 million. The increase in total assets was primarily attributable to the receipt of the compensation amount from the litigation won, partially offset by the outlay of $3.0 million done on the acquisition and settlement of 1-9 Huntress Road, Berrinba; and $4.5 million deployed on value accretive capital improvements.
 

GDF’s 1H FY19 Financial Highlights (Company Reports)
 
What to Expect From GDF: As regards the outlook, the company will continue to seek opportunities to grow its AUM in lower incentivised markets. The company will be specifically seeking Industrial assets in Brisbane, commercial office assets in Melbourne as well as strive for Individual asset values of $20 million - $50 million. Moreover, the company is trading at an EV/ EBITDA multiple of 20.7x, which is at a relative premium with the Industry median of 18.5x. Also, the company’s financial leverage has risen for the period which is evident from the Net Debt/EBITDA multiple of 6.42x in FY 2018 and long-term debt to total capital ratio of 30.8% vis-à-vis 3.59x and 8.7%, respectively in FY 2017.
 
Meanwhile, the share price has risen 6.72% in the past three months as at 26 February 2019 and trading slightly towards 52-week higher level. Hence, considering the increased financial leverage, increase in EBITDA due to a one-off event, and a higher EV/EBITDA multiple, we consider the stock to be “Expensive” at this price point of $1.365 per share (up 1.111% on 27 February 2019).
 
 

Cromwell Property Group

Stable dividends & deleveraging balance sheet: Cromwell Property Group (ASX: CMW) had disclosed the DRP price of AUD 1.04520 & the calculation methodology for the same.This price is been calculated as the average of the daily volume weighted average price of Stapled Securities sold on ASX during the ten trading days immediately prior to the plan record date to which the distribution relates.
 
Earlier, the management of the company said that it is extending it's on market buyback programme. Now the programme will continue until the 17th of January 2020, unless the maximum stapled securities is bought back, or the company ceases the buyback earlier. A maximum of 194,325,974 stapled securities are targeted for the buyback.
 

CMW’s FY18 Financial Highlights (Company Reports)
 
For FY18, the total assets under management (AUM) increased by 14% on a YoY basis to reach $11.5 billion. This growth was driven primarily on the back of the successful IPO of the Cromwell European REIT.
 
What to Expect From CMW: For FY19, the company has guided operating earnings of at least 8.00 cents per security (cps). The company has also provided with the distribution guidance of not less than 7.25 cps. Moreover, the company is trading at a P/E ratio of 10.06x, which is at a relative discount with the Industry median of 16.1x. Also, the dividend yield stood at 7.11% which outperforms the Industrial median of 5.6% this signifies that the company is producing better returns for the shareholders in form of dividends. Meanwhile, the stock has risen by 10.61% in the past three monthsand is trading slightly up from the lower level, representing an attractive opportunity for the investors to acquire the stock at the current levels. Hence, considering the robust dividend yields, better than industry P/E multiple, and returns for the three months period, we maintain “Buy” rating on the stock at the current market price of $1.095 per share.
 

Scentre Group

 
Received Fitch ‘A Stable’ credit rating: Scentre Group (ASX: SCG) disclosed that it has been assigned an ‘A Stable’ credit rating from Fitch. This rating was assigned considering the Scentre Group’s premier asset portfolio and unique operating platform as well as the Group’s stability of income and strong financial position.
 
As per the results released for the 12 months period to 31 December 2018, the firm registered a Funds From Operations (“FFO”) of $1.34 billion representing 25.24 cents per security, up 3.9% and distribution of 22.16 cents per security, up 2%. This growth was achieved on the back of a rise seen in the Net operating income as well as the project income on account of quality of the firm’s platform and its strategic implementation of stated plans.
 
The recent release from the company stated that BNP Paribas Nominees Pty Ltd has increased its voting power in the company from the erstwhile 6.57% to 7.58% derived from the “Person’s vote” which rose from 349,740,608 to the levels of 403,230,063.
 
What to Expect From SCG: Going forth, the Group forecasts the FFO growth for the 12 months ending 31 December 2019 of approximately 3%.The distribution for 2019 is anticipated to be 22.60 cents per security.

 

SCG’s specialty In-Store sales growth (In %) (Source: Company Reports)
 
On the financial metrics front, the company has been able to efficiently manage its debt profile which is evident from the interest coverage of 3.5x and gearing of 33.9%. Thus, considering the stable incomes, strong occupancy at 99.3% along with optimization of debt profile, and decent FFO growth guidance for FY19, we maintain our “Buy” rating on the stock at the current market price of $3.840 per share (down 0.518% on 27 February 2019).
 
 
Stock Price Comparative Chart (Source: Thomson Reuters)    

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