HY20 result: is this share the best for the ageing tailwinds?

Lifestyle Communities Limited (ASX:LIC) reports its HY20 result, is it the best to profit from the ageing tailwinds.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lifestyle Communities Limited (ASX: LIC) has reported its half-year result for the six months to 31 December 2019.

What is Lifestyle Communities?

Based in Victoria, Lifestyle Communities develops, owns and manages affordable independent living residential land lease communities. Lifestyle Communities has twenty residential land lease communities in planning, development or under management.

Lifestyle Communities result numbers

Total management and other revenue increased by 22.4% to $15.3 million. Site rental income increased by 25.6% to $11.4 million due to an increased number of homes under management and a rental increase of 3.5%.

Deferred management fees rose by 20.8% to $2.4 million due to 37 resales in this half-year compared to 30 in the prior corresponding period.

The gross profit on the construction and sale of homes fell 41.1% to $8.6 million with a lower number of settlements, it's expected that FY20's settlements will be weighted to the second half. This includes Mount Duneed and Kaduna Park.

Development expenses, including sales and marketing costs for new projects, increased 18.8% due to higher sales in the period. Management rental expenses rose 18.8% with additional homes under management.

Looking at the balance sheet, net assets rose by 4.9% to $267 million as the business continues to build its portfolio of locations. Both the value of its properties and its debt increased.

Lifestyle Communities dividend

The Board of Lifestyle Communities decided to declare an interim fully franked dividend of 3 cents per share, an increase of 20% compared to last year.

Is Lifestyle Communities a buy?

In FY20 129 new home settlements have been achieved to 14 February 2020, a further 213 are scheduled for completion of construction by 30 June 2020 of which 165 are sold and awaiting settlement.

Planning delays meant that construction at Kaduna Park and Wollert was commenced later than planned.

I like that Lifestyle is receiving a growing stream of rental income from the homeowners, with the weekly site fee being 21% to 25% of the age pension after receiving rental assistance. This leads to growing dividends.

The share price has performed strongly over the past year, though it's down 4.5% today at the time of writing. With interest rates being so low, I'm not sure I want to buy shares whilst house prices being very high.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »