Dexus (DXS) is one of Australia’s leading real estate groups, owning, managing and developing high-quality office, industrial and infrastructure assets across the country. They delivered a better-than-expected 1H result – covered Here. The standout was the launch of a new on-market buyback, signaling more proactive capital management and providing share price support around these levels – the plan to buy back up to 10% of securities over the next year while paying an unfranked yield of ~5.6%. Not a bad starting point for investors, especially if MM is correct and the RBA only hikes once more at most through 2026.
- The buyback makes total sense to us with the stock trading over 20% below its NTA.
After almost halving over the last few years, DXS is trading on the cheap side of history, and while occupancy is on the lower side at ~85% across its two key markets, we see little downside from current levels – hopefully not famous last words!
- We can see DXS ultimately testing ~$8 when markets get more relaxed around the path of the RBA.
MM is bullish towards DXS around $6.70
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