About the author:
- Author name:
- By Scott Murdoch
- Job title:
- Date posted:
- 07 December 2015, 11:08 AM
- Sectors Covered:
- Contractors/Developers, Consumer, Diversified Financials
- Villa World (VLW) has upgraded NPBT guidance by 15% to A$46.6m (previous guidance A$40.5m). The FY16 NPAT is expected to be A$32.6m, 9.4% ahead of our forecast. Profit is expected to be relatively even between the first half and second half in 2016.
- The Eynesbury project sale has now been settled, with improving pricing contributing an incremental A$2.3m to earnings from previous guidance (~38% of the upgrade; a total contribution of A$3.6m). Excluding the Eynesbury uplift, guidance from underlying operations has been lifted ~9.4%. A$9.5m in cash will be received from the JV in 1H16.
- VLW expect to pay (at least) a 16cps dividend for FY16.
Impact on forecasts
- VLW's guidance is 9.5% ahead of our current forecast.
- Our FY16 dividend forecast of 16.5c sits slightly above the minimum 16cps that VLW expects to pay.
Excluding the uplift achieved from the Eynesbury sale, VLW's upgrade of ~9.4% is very solid for this time of year (given a conservative approach to 4Q16 settlements is usually taken given timing risk). VLW will enter 2H16 with ~5 new projects launching and the development pipeline is well stocked to deliver growth into FY17. In our view, VLW is well placed to deliver on its current guidance this year with further growth in FY17.
Despite broad market cautiousness/concerns on the residential cycle, we continue to believe VLW's affordable product and geographic focus (skewed to Queensland) positions the business for further cyclical uplift. We believe VLW can maintain solid earnings through the cycle when conditions inevitably soften. A 16cps dividend equates to 8% yield which we view as attractive.
We maintain our Add recommendation.
Morgans clients can login to access further analysis and our upgraded share price target on Villa World (VLW). If you are interested in becoming a client, please contact your nearest Morgans office.
Disclaimer(s): Analyst owns shares.
The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
Print this page