Goodman Group: Higher and better use for portfolio assets protect value

About the author:

Author name:

By Liam Schofield

Job title:

Analyst

Date posted:

21 August 2023, 7:00 AM

Sectors Covered:

Industrials

• Goodman Group (ASX:GMG) delivered another solid result with Operating EPS (OEPS) continuing to grow at a healthy rate (+16%), more than offsetting any impact on cap rates from the higher interest rates.
• Management remain laser focused on infill sites across gateway markets, avoiding commodity industrial assets. GMG’s strategy has seen them avoid much of the interest rate pain, with the portfolio benefiting from market rental growth, low vacancy and the continued demand for under-developed industrial sites suitable for higher and better use (multi-level industrial | data centres | multi-unit residential).
• At an FY24f PER of c.20x, GMG is certainly not cheap, but quality companies rarely are. GMG is arguably an industry leader, focused on what remains the most contested real estate sub-sector – industrial. To this end, GMG’s pipeline of development sites across Tier 1 cities should benefit from increased demand for densification and proximity to end customers.

Find out more

You can find further detailed analysis of company results this reporting season by browsing our reporting season tag, and view a full list of upcoming results on our Reporting Season Calendar.

If you would like more information, please contact your adviser or nearest Morgans office.

Disclaimer: 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.