Growthpoint Properties Australia Ltd
GOZ Details
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Expanding portfolio via acquisitions: Growthpoint Properties Australia (ASX: GOZ) stock recovered over 2.7% on June 22, 2016 even though there is no specific update from the firm. This increase in the stock is broadly due to relief rally in the ASX which rose by 0.13% ahead of the Brexit outcome. The group recently reported that it acquired a fully-leased office building located at 75 Dorcas Street, South Melbourne, Victoria for $166 million. Major brands like ANZ Bank (with 57.7% of net lettable area), Mondelez (19.2%) and BMW (15.4%) have occupied the building and has a weighted average lease expiry of 5.0 years offering an initial yield of 6.6%. The group estimates FY17 income yield of 6.8% from the acquisition. Meanwhile, the group expanded its portfolio by acquiring over $328 million worth well positioned assets which are expected to enhance its value in the coming periods. But, GOZ even offloaded smaller industrial property at better than their book value. The group is still able to maintain an occupancy rate of 99%. On the other hand, there have been rumors over the group’s potential of acquiring Centuria. Moreover, based on the Australian reports, GPT Metro Office Fund has even made a facilitation and property rights deed with Centuria closing the doors for the GOZ. This could pose pressure on the stock, while the stock could be volatile in the coming weeks ahead of elections.
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Recommendation: Accordingly, despite today’s short term surge, we give an “Expensive” recommendation on the stock at the current price of $3.35
Growthpoint Properties Australia major leasing (Source: Company Reports)
Programmed Maintenance Services Limited
PRG Details
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Recovery in commodity markets boosting the stock performance: Programmed Maintenance Services Limited (ASX: PRG) stock surged over 3.4% on June 22, 2016 on reports of AustralianSuper Pty Ltd now having a 5.47% voting power in the stock. The shares of PRG fell over 28.3% in the last six months (as of June 21, 2016) due to the group’s downgrade of its performance for its second half of 2016 on the back of declining marine services due to commodity prices drop. On the other hand, the recovery in the commodity prices drove the stock by 16.3% in the last four weeks alone (as of June 21, 2016). The group is integrating its acquisitions while generating cost savings of greater than $30 million.
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Recommendation: We give a “Speculative Buy” on this dividend yield stock at the current price of $1.805
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FY16 performance (Source: Company Reports)
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