LLC has been a shocking performer over recent years, destroying value every time bargain hunters attempted to pick a bottom. This ~$2bn integrated property group reported a weak first-half FY26 result: a net loss of $318 million versus a $48 million profit a year earlier as revenue fell 37% to $2.84 billion. Despite the soft first half, management reaffirmed FY26 EPS guidance of $0.28–0.34, contingent on completing several key projects before year-end. However, the market remains understandably cautious on the company’s earnings outlook, they’ve been serial underwhelmers in recent results, with the stock rightly trading ~20% below its average 5-year valuation.
When LLC reports on the 17th, the focus will be the size of the loss, the quality of the balance sheet, and what the incoming CEO signals about the path forward.
- Balance sheet strength will be the market’s key focus. Following the Keyton and TRX asset sales, investors will be looking for a meaningful reduction in net debt and leverage from the mid-30% range reported at the 1H. If gearing remains above 30%, the result is likely to disappoint despite the recent asset disposals.
- Further impairments will be another key watchpoint. The 1H26 result was heavily impacted by write-downs, and we’ll be looking for any additional provisions, particularly on the Milano Santa Giulia (Italy) sale, which is expected to crystallise a post-tax operating loss of around $175 million. While further losses on asset sales are expected as Lendlease continues its capital recycling program, any impairments beyond those already flagged would likely weigh on the share price.
- We’re also looking for confirmation that One Circular Quay in Sydney and Victoria Harbour in Melbourne remain on schedule to support the anticipated earnings recovery in FY27. Any delays, cost overruns or margin pressure would be a clear negative, while guidance for around $6.5 billion of new work secured in FY26 and an $8 billion construction backlog should provide confidence in the medium-term outlook.
Leadership transition will also be in focus. While the FY26 result will be presented by the joint interim CEOs ahead of Nick O’Neil taking the helm on 10 September, early clues on the company’s strategic direction will be important, particularly around further asset sales, capital allocation and the pace of the balance sheet reset. LLC has a poor track record at earnings time; a new CEO has the opportunity to clear the decks and change things up.
- We would not buy LLC ahead of its report, but the narrative from the incoming CEO will be worth listening to, being the first external appointment in ~20 years; something had to change!
MM views LLC as an interesting turnaround story ~$3
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