Tuesday we saw a hint of an improvement for property in the results from Australand and AV Jennings.
Nothing stunning mind you, but there’s no longer a bottomless black hole in asset valuations and thanks to the first home buyers’ scheme and low interest rates, demand for housing is firm.
Yesterday, the biggest player to report so far, Stockland (an industry giant in fact), produced a first half profit for the six months to December and said to the market that it’s entering the second half in "the strongest shape".
Previous commentaries from the company had been far more cautious and in fact spoke about having "no visibility" about the outlook because market conditions were so tough.
Managing director Matthew Quinn said yesterday the last couple of years had been challenging for Stockland.
Now it seems those clouds are clearing.
“While market dynamics continue to fluctuate, we enter the second half in the strongest shape we have been in for some time and our business is well positioned to deliver results through the market cycles," Mr Quinn said.
Stockland said net profit for the six months to December 31 was $213.7 million, compared to a net loss of $726.9 million in the previous period.
Underlying profit was $334.6 million, up 17%.
Underlying earnings per security were 14.1 cents; down 21% from the previous corresponding period due to the higher number of shares on issue (Stockland raised lots of capital in 2009).
Distribution for the half was 10.8c per security; down from 17c in the first half of 2009 as the company moved to a new regime of paying distributions out of operating earnings and not borrowing (all property groups have been forced to do this).
"We had to make a lot of tough decisions, such as last year’s capital raising which places us in a strong financial position, but also came at the cost of dilution to our securityholder returns," Mr Quinn said in the company’s statement to the ASX.
"As we move into the economic recovery phase, we are focused on rebuilding securityholder value through a clear, consistent strategy and delivering strong financial results.
"Today’s announcement of solid underlying profit growth, momentum in our core business operations and upgraded guidance for the full year reflects good progress towards these outcomes."
The company upgraded its full year earnings per share guidance to 29 cents from 28 cents.
Total revenue was $942.1 million, up from $800.3 million in the prior corresponding period.
And the company left unanswered questions about some strategic holdings it has, especially in rival property giant, GPT.
"Stockland holds stakes in GPT, FKP and Aevum which it originally acquired in order to provide strategic optionality to diversify and grow its core businesses.
"The 13.1% GPT stake is held via a derivative structure which has been extended for 12 months to May 2011. As a result, the average entry price has increased negligibly and the derivatives are otherwise self-funding for their duration.
"Stockland owns 14.9% of FKP and retains an ongoing first right of refusal over FKP’s retirement living assets.
"The stake in Aevum has been diluted from 13.9% to 10.1% following Aevum’s merger with IOR Group.
"Merger and acquisition activity will only be contemplated if it can secure high-quality assets that fit with Stockland’s business unit strategies and enhances securityholder returns," the company said.
Stockland securities rose 5c to $3.95.
And there was some of the same sentiment from Queensland-based home builder Devine Ltd.
Despite recording a 90% fall in first half net profit, the company says its full year operating result should be around 25% above that reported in the 2009 financial year.
Devine reported yesterday that net profit was $1.221 million in the first half of 2009/10, down from $11.595 million in the first half of 2008/09.
The result was despite a 53.8% lift in revenue to $304.401 million.
Underlying profit was $14.424 million, up from $11.595 million in the first half of 2008/09.
Devine reported one off charges and impairments of $13.2 million, but the company said it expected no further impairments in the second half.
The builder declared no interim dividend.
But it sees one could be possible this half.
"For the full year to 30 June, 2010, Directors expect to achieve an underlying operating result after tax and before one-off items and impairments that is around 20% to 25% up on the $16.69 million profit after tax reported for the 2008/09 year.
"Directors do not expect any further impairments to be required in the second half.
"Subject to the company’s performance over the next six months, Director’s are also confident of declaring a final dividend based on the full year’s results," the company told the exchange.
Devine said it had reduced net debt by 38.8% to $220.6 million at December 31, through asset sales and a positive operating performance.
"For the full year to 30 June, 2010, directors expect to achieve an underlying operating result after tax and before one-off items and impairments that is around 20 per cent to 25 per cent up on the $16.69 million profit after tax reported for the 2008/09 year," the company said in a statement.
Devine’s ac
