Centuria Capital Group

CNI Details

Centuria Capital Group (ASX: CNI) is the for-profit entity and its principal activities include marketing as well as management of investment products, including property investment funds and friendly society investment bonds, and co-investments in the property investment funds.

Results Performance (Half-year Ended 31 December 2021)

• CNI posted total operating revenues of $139.4 Mn (reflecting a rise of 26% from HY 2021) as well as Operating PAT increased to $58.7 Mn (+73% from HY 2021).
• The company has delivered OEPS of 7.4 cps as well as it has declared the distribution of 5.5 cps for the period.
• The company retained robust balance sheet as at HY 2022 period end having $241 Mn of cash as well as undrawn debt on hand, an operating gearing ratio of 8.3% and robust operating interest cover ratio of 9.4 times.

Source: Analysis by Kalkine Group

Recent Updates

Recently, CNI announced that it has secured $223 Mn worth of healthcare as well as daily needs retail assets on behalf of the existing institutional partnerships. The recently announced, Centuria Prime Partnership (or CPP), a healthcare real estate JV with an investment vehicle sponsored by Morgan Stanley Real Estate Investing (MSREI), is focused towards the strategy of developing a new private hospital in Sydney’s inner south suburb of Alexandria, which would be having $163 Mn end value.

CNI’s subsidiary, Primewest, has divested 5 neighbourhood shopping centres on behalf of 2 unlisted wholesale funds, to SCA Property Group, for the collective $180 Mn, which represents 24.1% premium to book value. Collectively, the divestments are expected to generate $5.7 Mn performance fee for the group.

Outlook

The company is expecting continued attractive growth opportunities in Healthcare, Agriculture as well as Real Estate debt sectors. Its strategic vision revolves around consolidating position as the leading Australasian funds manager. CNI is witnessing the continued resurgence in demand for the Daily Needs Retail as well as Large Format Retail. CNI would continue to match this with retail investor as well as institutional demand.

Key Risks

CNI is exposed to the risks as well as uncertainties in the broader industry. Also, slowdown in the market it serves can impact demand.

Valuation Methodology: Price/EPS Based Relative Valuation (Illustrative)

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The stock has been valued using Price/EPS multiple-based illustrative relative valuation and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to Price/EPS Multiple (NTM) (Peer Average) (approx) considering attractive growth opportunities.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the aforementioned factors, we recommend a ‘Buy’ rating on the stock at the closing market price of A$1.930, up by 2.116% on 20^th June 2022.

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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.