LIC provides a “resort-style living” for people in their 50s and up, on the surface a growth area, but the stock has endured an extremely tough three years, and it’s currently down a painful 54% year-to-date. Not surprisingly, looking at the share price of the company, it’s struggling operationally; this early developer of so-called land lease accommodation targeted at downsizing Baby Boomers achieved 311 settlements in 2023-24, down -12.6% YoY, and profit between $52.4 million and $53.4 million, less than the $71.1 million in 2022-23. Also, an ABC report in July examined how the housing operator generates revenue; nothing good came out of it, with the stock falling over 30%. Comments from management sounded almost resigned to further issues:
- The company withdrew all future guidance – “due to the difficulty in quantifying the impact the uncertainty caused by recent media coverage might have on future sales and settlements”.
LIC will benefit from reduced borrowing costs when the RBA cuts rates, but until it convinces its customers, present and future, that its payment structure is fair, the stock is in the too-hard basket for MM.
