Reporting Season

Goodman Group’s operating profit up 25%: Growth to continue

By Market Index
Tue 16 Aug 22, 11:25am (AEDT)
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Key Points

  • Goodman Group posted a full year profit lift of 47.7% to $3.4bn
  • Management guided to FY23 operating EPS of 90.3c, up 11% on FY22 but lower than consensus
  • Citi suspects there’s substantial upside to the trust’s FY23 eps guidance

The was sufficient good news in Goodman Group’s (ASX: GMG) full year FY22 result this morning to drive the share price higher on two key measures.

Firstly the numbers: The real estate investment trust posted a full year profit lift of 47.7% to $3.4bn.

For the full year ended 30 June 2022 Goodman’s operating profits grew by 25.3% to $1.5bn in the 2022 financial year, in-line with broker estimates, while revenues jumped by more than a third to $5.2bn.

Secondly, the sentiment behind the numbers made it clear to investors that management has every intention of repeating last year’s sustained growth in the face of current market volatility.

Mid-June management announced that it would repeat the interim dividend of $0.15 cents per share (CPS), payable 25 August.

Management also guided to FY23 operating EPS of 90.3c, up 11% on FY22 (81.3c), and for the distribution to remain at 30.0 cents per share.

Goodman’s FY23 EPS guidance miss, versus the consensus expectation of 15%, probably explains why the share price was down around 1% at the open.

However, at the close the picture may look somewhat different.

Strong operating performance

Management attributed what is regarded as a “strong operating performance,” to the long-term focus of the trust.

“By focusing our portfolio and $13.6 billion development workbook on key infill locations, we have had seen accelerating market rental growth, significant valuation uplift and subsequent outperformance of our partnerships,” noted group CEO Greg Goodman.

Other highlights within today’s result include:

  • Assets under management (AUM) up 26% to $73bn

  • Net tangible assets (NTA) per security of $8.37 per security, up 25% from FY21

  • Portfolio occupancy remains high at 98.7%

  • Development work in progress (WIP) up 28% on FY21 to $13.6bn

  • Gearing at 8.5%, (6.8% at FY21)

  • Property investment earnings increased 20% to $494.6m

  • Like-for-like NPI growth at 3.9%

  • Development earnings were up 34% to $960.7m


Based strong demand and balance sheet, Goodman told investors the trust is well positioned to continue to adapt to ongoing market volatility and geopolitical tensions.

"Our production rate, depth of customer demand and strong margins are supporting the outlook for development earnings into FY23,” Goodman noted.

“We have made a strong start to FY23 with a significant development workbook underway, continued underlying structural demand from customers, and a robust capital position across the Group and Partnerships.”

Goodman Group share price over 12 months.


What brokers think

Goodman’s share price is down -8% over one year, and year-to-date has bounced from $26.96 to $20.44.


Consensus on Goodman is Moderate Buy.


Based on Morningstar’s value of $20.00 the stock appears to be fairly valued.


Goldman Sachs maintains a Buy rating and believes Goodman offers a potential 12m total return of around 45%.

The broker’s 12-month price target is $25.40.


Based on the six brokers that cover Goodman (as reported on by FN Arena) the stock is currently trading with 7% upside to the target price of $22.10.


Given Goodman’s tendency to under-promise and over-deliver, Citi (Buy and target price of $22 – 16/08/22) suspects there’s substantial upside to the trust’s FY23 eps guidance.


Expect broker updates later this week.

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