Most people have spent the last 12 months looking over their shoulder and if you believed all the press just a few months ago there was no future for industrial property or the financial world!
Only the brave look ahead in these periods and it is they who stand to make the most. GMG was one such opportunity earlier this year when it was below 15c and everyone was worried about financing.
So with this in mind what is GMG worth going forward?
I have looked at the numbers and here are a few comments.
Financial status is the key I believe and shares on issue will be the main concern.
Shares on issue at 30/06/08 were around 1.7b and yearly distribution was running around 34c
If we assume a capital raising is coming again soon shares on issue could be
1.7b 30/6/08 1.1b approx issued in Oct/Nov 08 placement 0.7b issued options to CIC and Macquarie 3.8b shares if they go ahead with the possible raising of $1.5b at say 40c
Total shares approx 7.3b
If GMG can get earnings back to around the old levels with developments coming back mostly in Asia (China)and less in Europe then it could be something like -
Earnings PA $500m to $600m Shares 7.3b Distribution 7c to 8c per annum Share price around $1 for a 7% to 8% yield
If GMG does issue the expected say 3.8b shares in coming weeks to raise approx $1.5b then the focus moves from debt and re-financing issues to one of growth prospects and earnings in the next few years.
On this front i think we will see a big focus in China with CIC as a partner and we could see maybe ING Industrial fund merger or takeover on the cards. We will need this to get the share price up near $2 in the longer term.
Just my thoughts.
Good luck all holders.
GMG Price at posting:
49.5¢ Sentiment: LT Buy Disclosure: Held
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