Treasure Chest: Stockland

This story features STOCKLAND. For more info SHARE ANALYSIS: SGP

FNArena’s Treasure Chest reports on money making ideas from stockbrokers and other experts.

By Danielle Ecuyer

Whose Idea Is It?

Citi

The subject:

Stockland ((SGP))

The thesis

Citi has rung the bell on a more bullish short term move in the Stockland ((SGP)) share price with the imminent July 4th determination from the ACCC on the purchase of the Lendlease ((LLC) Lifestyle Communities business, in conjunction with Thailand’s Supalai.

The analysts have opened a so-called ‘Upside 30-Day Catalyst Watch’ on the shares, expecting the ACCC will rule positively on the proposed deal, with a subsequent positive impact on the Stockland share price. Year-to-date, the shares haven’t performed, also lagging the sector generally.

At the most, Citi analysts comment, “we believe the transaction will go ahead with a couple of sites having to be taken out from the acquisition bucket to address any competition issues”.

More info

In December 2023, Lendlease announced the sale of 12 domestic community projects to Stockland and Supalai Australia for $1.3bn with Stockland retaining a 50.1% interest.

The deal also received the thumbs up from Jarden, which believes the acquisition will drive FY25 earnings growth for the property group, as well mark as an improvement in residential momentum in the run up to any rate cuts.

The market has been harbouring concerns around a potential refusal by the ACCC to allow the acquisition to go ahead, which is likely why the shares haven’t performed thus far this year. 

Citi forecasts some 4% of the total FY25 6% EPS growth estimate would be generated by the acquisition and concludes this is a potential major short-term driver of investor sentiment, possibly triggering a share price re-rating.

The FNArena consensus target price of $5.013 suggests circa 13% potential upside with an indicated 5.9% dividend yield on FY25 forecasts.

Jarden notably upgraded the stock to Buy from Overweight last week with a $5.45 target.

Morgan Stanley has the second highest target price at $5.30 with an Overweight rating, followed by Citi at $5.10 alongside a Buy rating. 

UBS hasn’t provided a recent update but was Neutral rated in early May with a $4.64 target price.

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