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Why investors have sent Stockland’s share price up 23% in August

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The Stockland Corporation Ltd (ASX: SGP) share price has gained 23% so far in August, with the share price closing 1.04% higher today.

Stockland’s share price reached its highest level in more than a decade on February 20, when it was trading for $5.42 per share. But as you’d expect with a property developer and manager, the COVID-19 market selloff that gripped most ASX shares hit Stockland particularly hard. From February 20 through to March 23 Stockland’s share price crashed 67%.

It has rebounded strongly from there, with the share price up 118% from the March low. But that hasn’t been enough to erase its earlier losses, with Stockland’s share price down 16% year-to-date.

By comparison, the S&P/ASX 200 (INDEXASX: XJO) is down 9% in 2020.

What does Stockland do?

Stockland develops, owns and manages retail, logistics, office and residential properties.

As at June 30 the company had 30 retail town centres in Australia, with an ownership interest valued at $6 billion. Stockland’s 31 logistics properties span 1.3 million square metres, with an ownership interest valued at $2.9 billion. In addition, it has 4 office properties valued at $1 billion.

Stockland’s residential footprint is by far its largest. The company focuses on master-planned communities and medium density housing in growth areas across Australia. Its portfolio consists of 51 communities, with 74,000 lots remaining. Stockland estimates the end value is worth approximately $19.8 billion.

Stockland’s shares began trading on the ASX in 2005.

Why has the Stockland share price gained 23% in August?

Stockland’s share price has been in a solid uptrend all month.

Investors appear to be increasingly looking beyond the short-term impacts of the coronavirus and towards the company’s longer-term prospects. Prospects that will only be aided by recent affirmations from the world’s leading central banks that interest rates are likely to remain at record lows for a long time yet.

Stockland is also reducing its exposure to some of its retail holdings as it increases its focus on logistics.

The company’s full year 2020 financial results, released this Tuesday 25 August, also came in better than many analysts had expected. For the year ending June 30, Stockland reported an 8% drop in funds from operations. But, thanks to strength in its residential settlements, the company had a net operating cashflow of $1.1 billion in FY20. And it paid a full year dividend of 24.1 cents per share.

Stockland’s share price is up 8% since the release of its full year results.

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Motley Fool contributor Bernd Struben 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.

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