Diversified property group MGR has advanced by almost 25% year-to-date, outperforming most stocks in the sector and the ASX200. At their last update, residential sales were up nearly 80% on the prior corresponding period. However, some analysts were puzzled by the company’s unchanged guidance given its efforts to reduce balance sheet risks in the 3rd quarter and following a recent sale of a large land parcel to Serentias, which should add $10-15mn of earnings (EBITDA), or 0.3c per profit share. The country’s development growth to combat the housing shortage should be beneficial to MGR over the coming years, although we don’t believe it will get as many interest rate cuts as other investors think, but its sustainable 4.6% yield is still attractive.
- We still like MGR, but it’s approaching our initial $2.50 target area: we hold MGR in our Active Growth Portfolio.
MM remains long and cautiously bullish MGR
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