MGR +6.32%: delivered a respectable FY26 result and, more importantly, FY27 guidance points to another year of earnings growth despite a still-challenging property backdrop. The stock rallied strongly as investors focused on improving earnings visibility, the recovery in statutory asset values and a new A$200m buyback.
Key results:
- Operating profit of A$508m, up 7%, slightly below A$513m expected.
- Operating EPS of 12.9c, up from 12c.
- Statutory NPAT of A$677m, versus A$68m last year and ahead of A$591m expected.
- Revenue and other income of A$3.08bn, up 13%.
- Final distribution of 4.8cps.
FY27 operating EPS is expected to rise to 13.2–13.4c when consensus had baked in no growth in the stock for the period. Distribution guidance sits at 9.9cps. Guidance assumes 2,800–3,100 residential settlements and a weighted average cost of debt of around 5.7%.
MM’s view: The property sector has spent several years absorbing higher rates, falling asset values and expensive debt; the attraction now is that expectations are low while earnings and NTA have a pathway higher. The A$200m buyback is also a sensible use of capital if securities continue trading below underlying asset value. We own MGR across both our Active Growth and Active Income Portfolios and still see property as an accumulate as an end to the rate hike cycle comes into view.
MM remains long and bullish MGR
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