How long have you held Lend Lease Group (market cap $9.5 billion)?
We’ve had an overweight position versus the benchmark in Lend Lease Group (LLC) since July 2014.
What do you like about it?
Lend Lease Group is leveraged to the Australian property market cycle through its residential development division. The low interest rate environment, combined with strong overseas demand, is driving its strong pre-sales of residential apartments across its portfolio (in Australia and the UK), under-pinning its development profit for the next three years (given two to three years lag for settlement). In addition, Lend Lease has continued to grow its residential projects pipeline with a number of new offshore projects announced recently in Asia and the USA.
How is it better than its competitors?
The company has extensive residential development experience in Australia, with the largest urban regeneration projects pipeline in multiple geographic locations. Lend Lease Group has a global footprint, enabling the company to diversify its portfolio risk and leverage its core competencies in offshore markets.
What do you like about its management?
Experienced senior management and a supportive board have a clear long-term strategy and vision. Management has improved its internal risk-management and has been focusing on creating a projects portfolio effect to diversify its risk and market exposure.
What is your target price on Lend Lease Group?
Around $18.50 in the next 12 months.
[1]Source: Yahoo!7 Finance
At what point would you sell it?
We will look to review our position if the domestic property cycle shows signs of deteriorating.
How much has it added to your overall portfolio over the last 12 months?
Lend Lease Group is up around 28% over the past year, outperforming the S&P/ASX 200 Accumulation Index, which is up around 8% on a total return basis over the same time period.
Is it a liquid stock?
Yes. There would be no liquidity issues for most global and domestic investors.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.