The Goodman Group (ASX: GMG) share price is in focus after releasing its March 2024 quarter update.
Goodman is a property business, it has operations and investments in Australia, New Zealand, Asia, Europe, the UK and the Americas. It manages industrial properties and business spaces globally.
March 2024 update
The business said it performed strongly in the third quarter of FY24, leading to the business upgrading its operating earnings per share (EPS) growth for FY24 to 13%.
It said it completed $0.8 billion of developments in the quarter, with 96% of completions in the year to date committed to tenants. It now has $12.9 billion of development work in progress (WIP) across 82 projects.
The rental side of the business is also performing strongly. On a 12-month rolling basis, Goodman experienced like-for-like net property income (NPI) growth of 4.9% with properties in its partnerships. The partnerships had an occupancy rate of 98% across its partnerships, which remains strong and high. The portfolio weighted average lease expiry (WALE) was 5.1 years.
Goodman’s total property portfolio now has a value of $80.5 billion. Ongoing growth is helping the Goodman share price.
The business explained the location and quality of its properties enables “increased productivity”, driving demand as its logistics customers are seeking to improve their supply chain efficiency using automation and offering faster transit times.
It’s also developing large-scale data centres and it is expanding its global power bank to address growing data centre demand as AI usage and cloud computing expands. In the March quarter, the global power bank increased by 0.3GW in Q3 to 4.3GW across 12 major global cities.
It’s in active discussions with customers on delivery and leasing models for powered shell and full infrastructure fit-out solutions that best suit their requirements. There are also several sites owned/controlled by the group and partnerships that are currently under review for potential data centre use.
Outlook for the Goodman share price
In the near-term, Goodman thinks total logistics demand is likely to remain at “more moderate levels”, however supply has been “significantly reduced globally” and is generally “very constrained” in its markets.
It thinks these dynamics, combined with the scarcity of available assets, “should support rental growth and high occupancy”. It thinks strong growth in cloud and AI could help demand for land.
Goodman suggests it’s well positioned for growth, with low debt levels. I agree, however with the Goodman share price up 70% in a year, I think the market has fully taken its growth potential into account. I’d want to wait for better value (a lower price or earnings growth) before investing a lot into this stock.
