LLC -2.83%: Fell today after reporting FY23 results that were inline in terms of underlying net profit ($257m), however, it was low quality and their reconfirmed guidance requires a few moving parts to align. They said they’re on track to meet the lower end of their guided Return on Equity (ROE) range of 8-10%, driven by >$8bn of development completions, improving construction margin and $60m of pre-tax cost savings in FY24. That guidance implies that earnings will approx. double in FY24 as they continue to skew the composition of earnings towards asset management v development. That move will drive better margins, and better earnings over time, however, some patience will be required here. Our takeaway from the call is there are still some risks in executing this transition, particularly given the challenging operating environment where confidence remains low as uncertainty around inflation and interest rates persist.
- On FY24 expectations, LLC is trading on 10.8x, which is around 3 P/E points cheap, however, this relies on strong earnings growth being achieved in FY24
MM is long & bullish LLC – today’s result does not change that view
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Lendlease (LLC) Forward PE – Source Bloomberg
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Lendlease (LLC) Forward PE – Source Bloomberg
