Integrated property giant GMG has been whacked since its report earlier in the month – a 23% lift in earnings, $13.4bn of work in progress and reconfirmation of FY2022 guidance failed to excite investors due to macro concerns:
- We can understand the concerns towards property but GMG is running with very low gearing, it could even benefit over the longer term if we see distress across the sector.
- This is a business with plenty of liquidity to buffer against tough times but comments from Amazon around having “too much space” is a definite short term headwind as they account for 6-10% of GMG’s development work.
- However, with occupancy close to 100% we can see these smart operators plugging the Amazon hole over the next few years as companies strive to bring more of their supply chains onshore.
Obviously, as interest rates start to rise for the first time in many years we like the idea of backing an operator who almost lost the lot through over-leverage in the GFC, they’re prepared and not over-leveraged.
MM likes GMG under $20
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