Sunland is performing in line with expectations and has reconfirmed its FY16 NPAT guidance of $25-29m
Sunland has posted its half yearly (1H16) results. The group is performing in line with expectations and has reconfirmed its FY16 NPAT guidance of $25-29m. Gearing is currently rising primarily due to the Abian high rise project development. However this is as expected and the project is now fully sold. Net tangible assets, while weakening remain at a healthy $340.3m.
The accounts and the investor presentation can be found here
. The results are summarised in the following table:
| $m | 1H16 | 1H15 |
|
Revenue (property sales)
|
79.9
|
97.3
|
|
EBITDA
|
6.6
|
9.2
|
|
NPAT
|
3.1
|
3.2
|
|
Total assets
|
580.8
|
505.3
|
|
Total debt
|
205.6
|
113.3
|
|
Net debt
|
189.7
|
87.0
|
|
Total liabilities
|
240.4
|
147.5
|
|
Net tangible assets
|
340.3
|
357.8
|
|
EBITDA/interest
|
3.6x
|
4.1x
|
|
Debt/total capital
|
37.7%
|
24.1%
|
|
Debt/tangible assets
|
35.4%
|
22.4%
|
Source: Company reports - Revenue from property sales fell to $79.9m in 1H16 from $97.3m in 1H15 and property settlements fell to 120 from 195.Volatile earning are typical of property developers with income only recognised when the development has finished and properties are settled. The fall in 1H16 was largely due to the sell out of medium density housing in Melbourne (Carré Residences and The Gardens) and the group’s multi-storey projects with Marina Residences fully settled and Abian under delivery
- Sunland’s earnings this financial year are expected to be weighted to the second half (2H16) as existing projects such as The Lakes (QLD), The Heights (QLD), and Dahlia Residences (NSW) will be delivered and settled during this period
- Despite the lower settlements, the development profit generated was slightly above the previous period at $17.9m (1H15: $17.2m) with the development margin of 25% above the 20% target
- The group has scheduled six new projects for launch in 2H16 and therefore anticipate achieving approximately 530 sales for the full year. The group currently has 855 contracts in hand with a value of $663m
- Directors confirmed full year NPAT guidance in the range of $25-29m
- Gearing is rising as expected to 37.7% debt to total capital for 1H16 (1H15: 24.1%). Gearing will increase as Sunland delivers its development portfolio, particularly high rise projects which are more highly geared than housing projects. The current rise in gearing is primarily driven by the Abian development in Brisbane which has an estimated gross value of circa $240m.Construction is up to the 11th floor of the 40 floor project which is now 100% sold
- The rise in debt has reduced net tangible assets to $340.3m (1H15: $357.8m) but this is still a very comfortable level and represents a key strength of the credit
- Liquidity remains solid with Sunland holding $15.9m in cash and $82.0m in undrawn working capital lines at 1H16
- The development pipeline remains strong with 6,000 dwellings with a total end value of $3.7bn. During 1H16 new site acquisitions totalling $40m were made in Brisbane (St Lucia) and Sydney’s Northern Beaches (Ingleside), adding 181 allotments to the portfolio with an estimated end value of $217m
Conclusion
Sunland is performing as expected and remains in a sound credit position. Sunland’s November 2020 fixed rate bond is currently offered at an indicative yield to maturity of 7.34%. The bond is available to wholesale investors only.
Please note pricing indicative only accurate as at 25 February but subject to change.