BWP (ASX:BWP) share price tumbles after FY 2021 results

It hasn’t been a good day for BWP shares…

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The BWP Trust (ASX: BWP) share price is under pressure on Wednesday following the release of its full year results.

At the time of writing, the Bunnings-focused property company’s shares are down 2% to $4.02.

BWP share price tumbles after FY 2021 result

  • Revenue fell 2.3% to $152.24 million.
  • Like-for-like rental growth of 1.6%.
  • Profit before property gains dropped 2.6% year on year to $113.99 million due to deposit payment forfeitures in FY 2020.
  • Gains in fair value of investment properties rose 59.4% to $149.2 million.
  • Full year profit jumped 24.9% to $263.2 million.
  • Final distribution of 9.27 cents per share, bringing full year distribution to 18.29 cents per share.
  • Occupancy of 97.8% and weighted average lease expiry of 4.2 years at 30 June 2021.

What happened in FY21 for BWP?

Thanks to the company’s significant exposure to hardware giant Bunnings, it was able to collect the majority of its rent as normal in FY 2021. Just a small number of tenants, such as gym operators, were subject to COVID-19 closures. This meant that rent abatements totalled $473,571 for the year, leading to the company receiving 99.6% of rent due for the period.

In light of this strength and the attractiveness of Bunnings Warehouse properties to investors, the value of BWP’s property portfolio increased by $149.2 million or 6% over the year.

What did management say?

Management appeared pleased with the company’s performance in FY 2021. It notes that its profits were lower largely due to deposits forfeitures in the prior corresponding period.

It explained:

“Total income for the full-year to 30 June 2021 was $152.2 million, down by 2.3 per cent from last year. Rental and other property income was $3.4 million lower than the previous year, largely due to the $2.7 million of forfeited deposits received in the 2020 financial year. A reduction in income attributable to the straight lining of rent of $1.5 million was largely offset from annual increases in rent and rent from the properties repositioned. During the year, the Trust granted rent abatements of $0.5 million (2020: $0.4 million) for tenants affected by the COVID-19 shutdowns.”

What’s next for BWP?

BWP notes that there is a lot of uncertainty due to COVID-19. This could be what is weighing on the BWP share price today.

Its focus for the year ahead will be on filling any vacancies in the portfolio, progressing store upgrades, extending existing leases with Bunnings through the exercise of options, completion of market rent reviews, and the continued rollout of energy efficiency improvements at its properties. It will also continue to look for opportunities to grow its portfolio and create value for shareholders.

As for distributions, subject to there being no major COVID-19 or other disruption of the Australian economy, BWP expects to pay a distribution largely in line with what it paid in FY 2021.

The BWP share price is down almost 10% in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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