Stockland Corporation Ltd (ASX: SGP) shares could be on the move today after releasing results for the first quarter (Q1) FY20. Here’s what you need to know.
About Stockland
Founded in 1952, Stockland is one of Australia’s largest diversified property development companies with projects in shopping centres, housing estates, industrial estates and retirement villages.
According to Stockland, 124 families move into a home in one of its residential communities every week.
Property Rebound Drives Growth
The property price rebound, particularly in Sydney and Melbourne, is driving growth for Stockland, with Q1 sales moderately above expectations and on track to deliver more than 5,000 settlements in FY20.
In the retirement living sector, net reservations increased by 9.7% on the prior corresponding period, which Stockland said reflects both improving customer sentiment and housing market conditions.
Stockland has conditional agreements in place to purchase two new logistics assets in Brisbane with an end development value of $140 million, and there is a $2.5 billion development pipeline progressing and developing new joint venture opportunities.
Stockland Managing Director and CEO Mark Steinert said the house price recovery is expected to start benefiting the company in FY21.
“FY21 revenue is expected to benefit from the residential market recovery and five new communities driving increased lot settlement volumes above the mid-point of our through the cycle range, together with potential price growth and cost savings,” he said.
For FY20, Mr Steinert said, “As we announced at our full-year results, we forecast flat FFO per security in FY20, noting that market conditions remain variable although our confidence in the pace of recovery in the residential market has improved”.
Time To Buy Stockland?
The house price recovery certainly looks set to benefit Stockland, but the effects will take time to flow through to results. As stated above, FFO (funds from operations) per security is expected to be flat and Stockland stated that dividends will also be flat with a distribution payout towards the bottom end of the 75-85% target ratio.
With this in mind, I’m in no rush to start buying shares and I think it’ll take some time for performance to improve. I’ll be keeping an eye on the shares, but I’d rather invest in one of the proven businesses in the free report below.
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Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.
