APD 0.00% 89.5¢ apn property group

Brokers...are they right 50% of the time?

  1. 7 Posts.
    APN Property Group (APD) - Mark-to-market

    APN Property Group (APD) provides a unique leverage play on the REIT sector given just over half of its FUM sits in unlisted property securities funds. In this note we consider the mark-to-market impacts to APD from market movements in the REIT sector and share prices for Generation Healthcare REIT (GHC) and Industria RET (IDR). We maintain our BUY recommendation.
    Investment Highlights

    • Price target – $0.54 per share (based on our NAV).
    • FY17 P/E of 13.3x
    • FY17 EPS growth of -3.4% assumes no future performance fees for Generation Healthcare REIT.
    Unlisted Property Securities Funds
    • Since 31 Dec, REITs have delivered strong relative share price performance, delivering 11% compared to only 1% for the broader ASX200 market.
    • APD’s website shows its flagship A-REIT Fund currently has $1.13bn in FUM, +13% since 31 Dec.
    • This implies fund flows have slowed to ~$6m p/month, from ~$13m p/month in 1H16. Although, this appears to be due to a particularly weak start to the year given stronger market volatility, and since then net flows have returned closer to their previous levels.
    • We estimate that a 5% movement in the REIT sector broadly has a 2% impact on APD’s earnings.
    Listed REIT Funds – IDR/GHC
    • While Generation Healthcare REIT (GHC) continues to be a market darling, at present APD looks unlikely to receive a performance fee in 2H16.
    • Generally, a 10c movement in GHC’s share price will lead to a 1c movement in our NAV valuation for APD.
    • We also note a 10c movement in the Industria REIT (IDR) share price will lead to a 1c movement in our NAV valuation for APD.
    Earnings Revisions and Valuation
    • We revise our EPS estimates by 1% in FY16 and 2% in FY17, reflecting new FUM levels for property securities funds and the new $50m wholesale mandate recently announced.
    • Our NAV valuation for APD increases to $0.54 (was $0.51) based on recent increases in GHC share price.
 
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