The Goodman Group (ASX: GMG) share price is in focus after the business revealed its HY25 report and launched a $4 billion capital raising.
Goodman Group is a large property business that owns, develops and manages industrial properties, including warehouses and data centres, around the world.
Goodman HY25 result
Here are some of the highlights from the six months to December 2024:
- Like for like net property income (NPI) growth of 4.7%
- Its property portfolio value increased 7% from June 2024 to $84.4 billion
- Operating profit increased 8% to $1.22 billion
- Net tangible assets (NTA) per share up 7% from FY24 to $9.44
- End value of development work in progress (WIP) of $13 billion across 68 projects with forecast yield on cost of 6.7%
Goodman revealed that data centres currently make up around 46% of its development WIP, with significant projects expected to start by June 2026. This could play an increasingly important role in the Goodman Group share price in the coming years.
Its global power bank is 5GW across 13 major global cities, of which 2.6GW is secured and 2.4GW is in advanced stages of procurement.
Capital raising
Goodman said the demand for data centres is strong across its urban markets. It’s continuously evaluating both existing and potential opportunities, alongside its investment partners.
It has launched a fully underwritten ‘pro rata’ placement to raise $4 billion.
It will also offer eligible shareholders a non-underwritten share purchase plan (SPP) to raise up to $400 million.
This capital raising will provide the group with greater financial flexibility to pursue a number of growth opportunities across logistics and data centre operations. The proceeds will provide development working capital needs over the next few years.
The projects, expected to be active by June 2026, reflect around 0.5GW of power and have an estimated end value of more than $10 billion. Goodman’s share of development cost over the next few years is expected to be around $2.7 billion.
The money will also be used to progress other opportunities in the data centre and logistics space, while also maintaining conservative gearing.
The $4 billion placement will be priced at $33.50, a 6.9% discount to the closing Goodman Group share price. Regular investors will be able to apply to up to $30,000 of new shares at the placement price.
Management comments
The Goodman CEO Greg Goodman said:
Goodman’s strategy of providing essential infrastructure for the digital economy – both through our logistics facilities and data centres – has set a strong foundation for the growth we expect to see by executing the global data centre opportunity before us.
Goodman is well positioned to maximise the significant data centre demand across our markets.
The additional funds raised provide us with greater financial and operational flexibility to manage the next phase of growth.
Final thoughts on the Goodman share price
Goodman is one of the most impressive businesses on the ASX, in my view. It has done a great job at growing globally and it continues to have an impressive pipeline of projects.
However, what’s a good valuation with interest rates still quite high? It’s hard to say. I wouldn’t mind taking part in the capital raising, if I were a shareholder, but I’m not sure if I’d buy at the current price of around $36.
There are other ASX growth shares that could be more appealing where the potential growth isn’t already priced in.
