Covid has brought a second chance to listed real estate agent McGrath Ltd, with the company telling the ASX it is on track for a significant boost to full year earnings. Admittedly they are still going to be low but, compared to the losses of a year or so ago, it will seem like a new pot of gold.
After several years of struggle, cost cuts, management and senior personnel changes, the company reported interim earnings of more than $6.6 million for the December half after struggling to a $1.6 million profit the year before.
Now the boom-like conditions in the housing market is set to boost that strong rebound even further for the full year to June 30.
Based on forward sales projection and expectation the demand for housing will continue, McGrath forecast underlying earnings before interest, tax, amortisation and depreciation, (EBITDA) for the 2021 financial year in the range of $16.51 million to $17.51 million, compared with $3.7 million in underlying EBITDA for 2019-20.
This would be an increase of 373%, at the upper end of the range.
The news saw the shares rise more than 10% to a day’s peak of 73 cents. They settled back to end the day at 68 cents, up 4.6%. That’s still a long way from the IPO price of $2.10 three years ago.
In its update for the March quarter released on Monday, the company says national home values rose 5.8% – the highest quarterly growth rate since October 2003.
Sales volumes increased 12.6% nationally over the 12 months to March, with regional areas performing strongly, February 2021 seasonally adjusted year on year new household borrower commitments rose 48.8%.
Founder and Executive Director John McGrath said “Our unique business model of combining the strong annuity style income derived from Property Management and Franchise operations alongside our Company Owned Sales offices is delivering strong results. And in my opinion, we have the best agents in the country and we have been able to take advantage of the strong market.”
McGrath’s continued business improvement initiatives include:
- Implementation of growth strategies to improve agent productivity;
- Continued traction from our newly launched data centric website and other digital solutions; and
- Revitalisation of the property management businesses, with a focus on improving the overall customer experience.
