What: Aveo Group (ASX: AOG) is a leading owner, operator and manager of retirement communities. The company, previously known as FKP Property Group, has a market capitalisation of $1.5 billion. Aveo has just reported a 30% increase in underlying net profit after tax to $54.7 million, which equates to a 15% rise in underlying earnings per security to 10.9 cents.
So What: The impressive uplift in profits was driven by record total retirement unit sales of 721 during the 2015 financial year (FY). Amongst the highlights from today's results release was a 5% increase in net assets to $1.5 billion, a 3% increase in net tangible assets per security to $2.85, a 2% decline in net gearing to 13.8% and a 25% increase in the full year distribution to 5 cents per security.
Now What: Due to the structural nature of Australia's aging population it's almost a sure bet that there will be increased demand for the services provided by companies such as Aveo. Given Aveo's attractive asset base, the company looks well positioned to benefit and win its fair share of business from this trend.
Indeed the outlook for the current financial year appears positive with management stating that: "Heading into FY16, we have strong retirement sales momentum, a pipeline of 182 new units scheduled for delivery during the year and increasing care and support services across the entire retirement portfolio. As a consequence, we are providing FY16 underlying profit after tax guidance of over $80 million, a 45% increase on our FY15 result, and a full year distribution of 8 cents per security, representing a 60% increase on the FY15 distribution of 5 cents per security."
This upbeat assessment and strong growth forecast suggests Aveo could be a stock worth following closely.
