Villa World Ltd

Better 1H18 NPAT outlook: Villa World Ltd (ASX: VLW) stock moved up 4.4% on December 20, 2017 after the company has entered into a joint venture for the development of adjoining parcels of land totalling approximately 15.73 ha in Wollert, Victoria site with Ho Bee Land Limited. This site is 25km north of Melbourne CBD, 18 km from Melbourne Tullamarine airport and 300m from the future Wollert Town Centre. The Wollert joint venture is expected to contribute approximately $5.2 million to first half of FY18 NPAT, with development revenue contributing to the company’s profit from FY19.

Additionally, VLW has reaffirmed FY18 NPAT of at least $41.6 million. VLW is now targeting 1H18 NPAT in the range of $17 million-$18 million (1H17, $19.6 million). Earlier the company had expected the earnings would be significantly weighted to 2H18 due to the timing of delivery, and 1H18 NPAT was expected to be in the range of $10 million-$12 million. Further, VLW will continue to monitor product delivery and land title registrations towards the end of 2H18. In addition, VLW has planned to continue the payment of dividends in accordance with the stated payout policy of 50 - 75% of NPAT, paid semi-annually. The company has reaffirmed that the dividends in FY18 are expected to be at least 18.5 cps fully franked (FY17: 18.5cps). Meanwhile, VLW stock has risen 3.69% in three months as on December 19, 2017 and is trading at low levels. While the group is putting efforts with an aim to recoup in coming year, we give a “Hold” recommendation on the stock at the current price of $2.64

 
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