Goodman Group

GMG Details

Q1FY22 Performance Update: Goodman Group (ASX: GMG) is engaged in the business of real estate and has operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil. Its integrate own, develop and manage business model helps it to create innovative property solutions. As per a recent update, the Group has updated about its Q1FY22 performance and has posted decent results.

• The assets under management stood at $62 billion as of 30 September 2021, driven by gains in revaluation, development completions and net acquisitions.
• The company's underlying property fundamentals remain strong with a growth of 3.2% in like-for-like NPI growth.
• The occupancy level stood at 98.4% across the Partnerships.
• Development WIP was at $12.7 billion as of 30 September 2021, reflecting an increase of 19% from June 2021 levels.

Trend in Revenue (Source: Analysis by Kalkine Group)

Key Risks: The Group’s line of operations makes it business prone to macro issues like the ongoing COVID-19 impact.

Outlook: The outlook of the Group continues to be strong, and it expects AUM to grow to $70 billion by June 2022. The management believes that the strong investor appetite for logistics real estate will further drive positive revaluation of the [portfolio in FY22. The Group has upgraded its market guidance for FY22 with operating EPS growth expected in excess of 15%.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: As per ASX, the stock of GMG is trading close to its 52-weeks’ high levels of $23.950. The stock of GMG gave a positive return of ~30.93% in the past nine months and a positive return of ~11.52% in the past one month. The stock has support at $22 and resistance at $23.95. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a correction of high single-digit (in percentage terms). The company might trade at some premium to its peers’ average EV/Sales, considering the robust financial performance, and upgrade in guidance levels. For the purpose of valuation, few peers like Charter Hall Group (ASX: CHC), BWP Trust (ASX: BWP), Home Consortium Ltd (ASX: HMC) have been considered. Considering the current high trading levels, recent rally in the stock price, indicative correction in valuation, decrease in liquidity position and the key risks associated with the business, we suggest investors to book profits and give a ‘Sell’ rating on the stock at the current market price of $23.93, as on 02 November 2021, 02:01 PM (GMT+10), Sydney, Eastern Australia.

GMG Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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