Goodman Group is an Australian integrated commercial and industrial property group that owns, develops and manages real estate. This includes warehouses, large scale logistics facilities, business and office parks globally.
Goodman Group (GMG), a current holding within the momentum component of the ASX Growth portfolio, has this morning announced its earnings report for the first half-year, with shares up 5% today in reaction to an increase in profits and upgraded guidance.
For the first half-year of the financial year, Goodman has reported a 29% increase in profits to $1.13 billion, a 13% beat compared to expectations of $997.67 million. Earnings per share also topped forecasts, increasing to $0.592 from $0.464, and surpassing estimates of $0.53. Goodman announced a net loss of $220.1 million in the six months through Jun, attributing to a $3.4 billion reduction in property values, as rising long-term government bond yields impacted the global cost of capital. This is exactly as one would expect given the rise in longer-term interest rates and has affected the real estate sector equally. The company currently has $12.9 billion worth of development work in progress across 85 projects.
As of the end of December, the company boasted a 98.4% occupancy rate, with like-for-like net property income growing by 5% over the past six months, while the group’s total assets under management slightly decreased by 2% to A$79.0 billion. Goodman has maintained its interim distribution per security at $0.15 and reaffirmed its full-year distribution guidance of $0.30 per share.
What has been well received by investors today is upgraded earnings guidance for the full year, which is expected to see earnings per share increase by 11%, up from the 9% guidance previously, and is now forecasting an 11% increase in EPS, an uplift from the previously projected 9% growth. This increase in part reflects increased demand for industrial and digital infrastructure including data centers benefiting from increasing demand for artificial intelligence and cloud computing.
On the back of the strong earnings report and upgraded guidance, GMG shares are up +4.14%, outpacing the +1.63% gain in the Real Estate sector and the broader ASX200 which is up +0.63%. Overall, the results are highly positive, reflecting GMG remains well-positioned to capitalise from a well-located portfolio and expectations that headwinds from longer-term interest rates look set to ease in the latter part of 2024.
As a reminder, GMG’s inclusion in the ASX Growth portfolio is based on the momentum component of the portfolio and its inclusion will depend on how the stock trades between now and the next rebalance date of March 15th, 2024.
