Goodman Group (ASX: GMG) has reported its FY19 result to the market, are the shares are a buy?
Goodman is an integrated property group is the largest industrial property business on the ASX and one of the largest in the world. It’s described as integrated because it develops, owns and manages property across the world. It has operations in Australia, New Zealand, Asia, Europe, the UK, North America and Brazil. The various properties in its portfolio includes warehouses, large logistics facilities (think Amazon), business and office parks.
Was Goodman’s FY19 Report Better Than Good?
The Goodman operating profit was revealed to be 11.4% higher than it was in FY18, growing to $942.3 million. According to consensus estimates, the market was expecting a net profit of $941 million. Operating profit/earnings per share (EPS) grew by 10.5% to 51.6 cents.
Goodman boasted of strong property fundamentals with an occupancy of 98% and like for like net property income growth of 3.3%. Management earnings were 48% higher for the year and the average partnership total returns was 16%.
Total assets under management (AUM) increased by 21% to $46.2 billion and ‘external AUM’ rose by 22% to $42.9 billion. The property business significantly benefited from a valuation lift of $3.8 billion across the group and partnerships.
The development work in progress (WIP) was $4.1 billion across 55 projects in 13 countries with a forecast yield on cost of 6.6%.
Net tangible assets (NTA) per share increased by 15% to $5.34, which is one of the ways that investors value property shares, against the balance sheet/book value of the business.
Goodman’s distribution for FY19 is 30 cents per share, which was an increase of 7% compared to last year. That puts the current distribution yield at 2%.
Is The Goodman Share Price A Buy?
For FY20 Goodman is predicting that operating profit can grow by 10.4% to $1 billion, operating EPS per share of 56.3 cents (up 9% on FY19) and a distribution of 30 cents per share again.
The continuing focus by various businesses on improved logistics in urban environments should benefit Goodman. However, it’s trading at a very high premium compared to its NTA, so I’m not sure it’s good value at today’s price.
For steady growth of profit and dividends I’d rather consider the reliable businesses in the free report below compared to Goodman.
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.