Shares in one of the country’s largest real estate agents, McGrath (MEA), dived yesterday after it warned of a weak June half year.
The downgrade resulted in the shares slumping to new lows in opening trading, falling more than 16% to just 71c – a far cry from the $2.10 the shares were sold at when it went public a year ago.
After the early sell off the shares recovered to be down 5.2% at 81 cents. The news hit ther real estate skewing companies such as Fairfax (FXJ), News Corp (NWS) and REA Group (REA).
Fairfax shares slipped 0.5% to 85.5 cents, REA shares fell 2.3% to $54.50 and News Corp shares lost 1.6% to $16.30.
MEA shares have never traded above that price, finishing trading last week at 85.5c. In August, John McGrath who founded the company stepped down.
Earlier in 2016 the shares weakened on worries about the amount of business and the stability of senior staff.
The company doesn’t provide earnings forecasts, although it did state that analysts’ estimates of its full year profit outlook are too optimistic.
“The unprecedented low volumes of listings as a per cent of total housing stock noted in the chairman’s address [to the annual shareholder meeting] in November is not yet showing signs of improvement,” the company told the ASX.
"We believe the second-half results will be materially weaker than the first half, which would make those full-year analyst estimates look high," McGrath said in a statement to the ASX.
The first-half earnings results are currently being prepared for release on on February 23.
McGrath said the unprecedented low listing volumes noted at its November AGM had failed to improve.
The company also said "uncharacteristically large agent churn" will make it hard to achieve the growth in market share it recorded during 2015/16, when two thirds of its total offices increased their hold on the market.
McGrath has had 36 agents depart from its company-owned offices division in the first half, with 225 agents remaining.
It’s further confirmation that the real estate sector is facing renewed pressure this year – especially REA and News Corp, Fairfax and Domain, Mirvac, Stockland, AV Jennings and Villa World (which also issued a small downgrade for first half earnings in early December).
