Burswood the builder
Recommendation
Its business performance has been similarly unexciting, but respectable enough. In the year to June, sales were down 0.6% to $368.82m and although profit was up 3.5% to $29.6m, this included an abnormal gain of $2.5m, thanks to a legal victory defeating a council attempt to increase rates.
While the company's core business - gambling - has been slower than we would've hoped ever since the Asian crisis reduced the number of high rollers jetting into town, there have been recent moves to unlock some value from the balance sheet, by developing the 19.1 hectare former Swan Portland Cement site adjoining the casino.
Residential development
The plan is to turn this into a $300m residential complex. The company has short-listed three consortia to carry out the work. That will probably be a success, given the site's prime position overlooking the Swan River.
There's no real surprises with this move, either, given that the new(ish) CEO John Schaap has a background in the property industry. Before this move, he had already committed to a $75m refurbishment of the casino and hotel complex.
While we'd like to see growth coming from the core business, we're reasonably happy with developments. Burswood remains cheap in terms of both assets and earnings and we still think it's a SPECULATIVE BUY.