Sunland released its 1H17 results, reconfirming full year net profit after tax (NPAT) guidance of $35m
Results are in line with our forecasts. Gearing continues to rise as expected with the completion of the high rise Abian project. This project is considered to have minimal settlement risk and will complete from late FY17, providing strong cashflow and reducing debt significantly.
Results summary
Key points:
- Revenue generated from property sales totalled $95.4m from 204 settlements during the period, not including rental and project income. Comparatively, revenue from 1H16 totalled $79.9m from 120 settlements. Major contributors were: The Heights and The Terraces (QLD), The Gardens and Carré Residences (VIC) and Dahlia Residences (NSW)
- The Residential Housing and Urban Development segment achieved a development margin (return on cost) of 18%, below the group’s target return of 20%. The target is expected to be exceeded in the second half
- Liquidity and capacity is solid with $4.1m in cash and $82.3m in undrawn working capital lines
- Abian, Sunland’s high rise in the Brisbane CBD, is nearing completion – settlements are anticipated from late FY17. Settlement risk for this project is considered minimal. There is continued demand for high end owner occupied product, and it is our understanding that units bought off plan and currently offered for resale are seeking on average 22% increases to the initial purchase price
- Gearing continues to rise as expected to 42% debt/assets, with the year prior 1H16 at 33%. This is primarily driven by the Abian project (high rise projects are typically more highly geared than housing projects). Gearing however will decrease significantly following Abian settlements. The project has an estimated gross value of circa $240m, with Sunland’s total debt at 31 December 2016 at $286.5m
- Directors reaffirmed full year guidance of $35m NPAT
Development pipeline and pre sales
- As at 31 December 2016, Sunland’s development pipeline comprised 5,800 land, housing and multi storey products with a total end value of $3.8bn
- During 1H17 new site acquisitions totalled $47m, adding 425 allotments with an estimated end value of $389m
- Sales volume in 1H17 was double that of the prior corresponding period (pcp). The group completed 281 sales to the value of $200m. Prior year 1H16 noted 134 sales to the value $106m
- Contracted presales totalled 825 as at 31 December 2016, with a combined value of $669m
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