GMG -1.3%: FY24 EPS increased by +14%, beating guidance ~ of 13%. Management is guiding to FY25 growth of +9%, below the current consensus ~ of 12%, as the company stays with its “under-promise and over-deliver” attitude.
- Operating profit was up 15% to $2.0bn vs $2.05bn, Bloomberg estimates.
- FY Revenue of $1.98bn was up +0.7%.
- Operating EPS was $1.172bn, just shy of estimates of $1.20bn.
- Statutory loss of $98.9m reflects revaluation movements of -$1.5bn for the Group.
- Total dividend for FY24 of 30 cents per share
- FY25 forecast operating EPS of 117.2 cents, up 9% on FY24 but below Macquarie expectations of 120 cents
GMG is a world-class business MM owned in 2024 and is keen to do so again. However, it all comes down to price as management looks to transform its warehouses into data centres—a forward-thinking evolution that MM supports as it coincides with the global electrification trend over the coming years. Chief Executive Greg Goodman says the business will “look very different” in five years and described demand for information storage and processing capacity as “next level”. This is one management team MM has confidence in that can deliver such a transformation. To put things into perspective, over 40% of GMG’s $13bn development projects are around data centres, not quite all-in, but a significant move. GMG will transform into a “big infrastructure and real estate manager and developer”, taking on increasingly complex projects and, by definition, risk.
Our current issue with GMG concerns valuation. The stock is still trading 17% above its 5-year average valuation, which is arguably rich as it embarks on a new but unproven journey. Data centres are a hot sector, which makes sense to MM, but it still doesn’t warrant buying at any price. If the stock was trading at its average valuation of the last five years, it would again be sub-$30.
- We remain keen buyers of GMG around $30, which is not out of the question in today’s volatile market.
MM likes GMG around $30
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