AVJennings 

Strategic Acquisition in Auckland’s northern growth corridor to support overall growth:AVJennings Limited (ASX: AVJ) has recently disclosed the market about the acquisition of a significant green-fields development site in Auckland’s designated northern growth corridor and a regulatory approval has been received which is now unconditional. The acquisition of Hall Farm at Orewa, 37km north of Auckland, is expected to yield approximately 580 lots as the site is well connected to major transport routes into Auckland’s CBD including Highway 1 and is situated close to established schools, retail and recreational facilities. We expect that this acquisition will provide overall growth with the support of wholesale and retail land development sales, built-form residential product and commercial development. According to the management, the acquisition will be funded from the Company’s core $300 million ‘Club’ banking facility and the development should commence in 2018 with settlements due to commence in FY20.

Besides this, AVJ reported FY18 revenue of $374.3 Mn, down 6.8% as compared to prior year because of the timing issues related to revenue recognition at the Arcadian Hills development in Cobbitty, NSW. As a result, NPAT contracted to 12.2% to $31.3 Mn in FY18 over the prior year. Based on the performance, the Board of Directors declared a fully-franked final ordinary dividend of 3 cents per share, bringing the total FY18 dividend to 5.0 cents per share which is in line with the prior year. The final ordinary dividend will be paid on 11 October 2018 with the record date of 17 September 2018.


Financial Summary (Source: Company Reports)

Meanwhile, the share has fallen 4.61 percent in the past six months but has been up by 7.41 percent in the past one month as on September 07, 2018. As of now, the stock is trading at PE of 8.920x with the market capitalization of circa 286.32 Mn as of September 10, 2018. Based on the foregoing and expectation of improved revenue and earnings momentum at given levels of production, pre-sales volumes and continued progress of key projects, we give a “Hold” recommendation on the stock at the current market price of $0.720.

 
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