Gateway Lifestyle Group primed for more M and A: UBS - Washington Weekly
Friday 17/08/2018 - 04:38 pm


Gateway Lifestyle Group primed for more M and A: UBS


2016.08.31 06:31

 

Mergers and acquisitions will continue to be a feature of Gateway Lifestyle Groups earnings, despite a disappointing profit result, according to analysts at UBS. 

Analysts led by Doug Macphillamy said Gateways annual result came in 7 per cent lower than the brokers estimates. In a note to clients, UBS cut its price target on the stock to $2.75 from $3.01. 

The broker, however, retained a "buy" rating on manufactured home estate (MHE) provider Gateway.

"We expect Gateways MHE operations to grow via (a) manufactured home sales within the existing portfolio; (b) existing MHE expansions; (c) further MHE acquisitions; and (d) growth in manufactured site rents," UBS said.

 

 

 

"M&A will likely remain a feature, with $145 million in balance sheet capacity and plenty of headroom in terms of gearing. 

 

"Our $2.75 price target comprises a primary component for MHE rental + development earnings ($2.52), plus a secondary component from the potential acquisition pipeline ($0.23ps)."

In its first full-year result since floating in June last year, the $780 million Gateway posted a statutory net profit of $38.9 million, slightly below its prospectus forecast of $41.4 million.

Underlying profit of $44.8 million was 8.2 per cent above the prospectus forecast.But that underlying result was below the markets consensus expectation of $45.7 million, as is Gateways forecast for 5 per cent growth underlying net profit earnings in 2017.

The 2017 forecast implies net profit of $47 million, below the consensus expectation in the market of $57.2 million.



Read more: http://www.afr.com/street-talk/gateway-lifestyle-group-primed-for-more-ma-ubs-20160830-gr52aj#ixzz4IvNJib2i 
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