Australand Holdings
Recommendation
Australand’s full year result (it has a calendar year end) produced no surprises, leaving our investment thesis firmly on track. Underlying profit increased 6% to $128m, and higher property values helped increase net tangible assets per security to $3.52, an 18% premium to the current security price. Australand went ex a 10.5 cent unfranked distribution on 23 Dec 2010, bringing the full year total to 20.5 cents.
Buy | Up to $2.00 |
Long Term Buy | Up to $2.60 |
Hold | Up to $3.20 |
Sell | Above $3.20 |
The distribution is expected to increase to 21.5 cents in 2011, due to steady rent increases and almost perfect occupancy rates within Australand’s office and industrial portfolio. Though there is evidence things are slowly picking up, not much in the way of growth is expected from the residential and commercial development divisions. Thanks to the higher security price since our initial upgrade in Pouncing on downtrodden developers on 22 Jan 10 (Long Term Buy – $2.375), we don’t anticipate large capital gains from here.
With sober growth expectations and a forecast yield of 7.2%, we’re not far from taking some chips off the table. The security price has barely budged since 21 Dec 10 (Hold – $3.01) and we recommend you HOLD.
Note: The model Growth and Income portfolios own securities in Australand.