Goodman shares rally on earnings beat, reaps in $1.5bn in property revaluations

A focus on prime industrial real estate has propelled Goodman (ASX: GMG) first-half earnings well-ahead of analyst expectations. The company’s stock is up 4% at noon.

Financials at a glance: 

• Operating profit of $786.2m, up 28% 

• Assets under management of $68.2bn, up 32% 

• Portfolio occupancy of 98.4% 

• Like-for-like net property income growth of 3.4% 

• Development work in progress of $12.7bn, up 51% 

“The Group’s long-term focus on infill locations is underpinning our strong performance, and driving the volume and scale of the $12.7 billion workbook. It’s also increasing the value of our projects,” CEO Greg Goodman said. 

Goodman’s property portfolio reaped in $1.5bn of revaluation gains, boosting statutory (one-off) profits to $2bn - a 92% increase compared to last year.

The cherry on top of the cake was Goodman’s upgraded earnings guidance, projecting earnings-per-share growth of 20% for FY22. 

Commenting on the outlook, Greg Goodman said: “Our strategy to provide essential infrastructure for the digital economy is delivering. The business is performing strongly across all segments, including our development projects, leasing success, rental growth, significant valuation uplift and the strong performance of our Partnerships."

Goodman expects to deliver 30 cents in dividends by year-end, citing an “attractive opportunity to deploy retained earnings.”

Initial broker thoughts

Ord Minnett said the interim result has beaten its expectations.

The broker advises that its share price forecasts will need to be updated.

As it stands, the stock has an Accumulate (buy equivalent) rating with a $25.00 price target (1% upside).