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SCP

Poor SCP Property Group FY19 Result. Time to Sell?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Shopping Centres Australasia property group have announced a 37.4% profit fall for the financial year ending 30 June 2019. The share price is currently trading around $2.51, a fall of 1.37% in response.

SCP-property-group-FY19-results

SCP Property Group (ASX: SCP) operates over $3,147m in property assets including 85 company-owned shopping centres as well as 11 in unlisted funds. SCP has long term leases with both Wesfarmers Ltd (ASX: WES) and Woolworths Group Ltd (ASX: WOW), two of the retail sectors largest companies. SCP is currently operating on a P/E ratio in the mid-teens, at a market cap of $2,360m. The Company is also planning on paying a full-year dividend of 14.7 cents per share up 5.8% from last year, representing a payout ratio of 90%. This dividend payment is in line with market expectations.

SCP has reported earnings of $109.6m for FY19, a 37.4% decline on the same period last year. However, SCP has reported the earnings fall as a result of stamp duty and other one-off costs associated with its portfolio expansion. With earnings excluding non-cash and one-off items, Funds From Operations (FFO) at $141.8 Million up 24.1% compared to last year. This is a beat on market expectations of $136m. During 2019 SCP expanded their portfolio from $2,453.8m to $3,147.0m, representing acquisitions of $677.9m. The Company also has reported a 98.5% occupancy rate demonstrating the continual return SCP can expect from its asset base due to strong consumer sales.

 

Is SCP Property Group a good long-term investment? 

The Company is looking to continually diversify their portfolio moving towards more resilient consumer markets including food, liquor, retail services, pharmacy and medical. During FY19 Food/Liquor reported 3.3% and Retail Services 4.0% sales growth. This growth in sales has shaped the Company’s guidance for 2020, announcing an expected distribution to be 15.1 cps, up 2.7% on FY19. Guidance is in line with market expectations of 15 cps.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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