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Key points
- Booming e-commerce conditions are helping some ASX shares
- Goodman is benefiting from the huge demand of e-commerce industrial properties
- Brickworks is involved with a big pipeline of industrial real estate like distribution warehouses
E-commerce has boomed over the last two years. Some ASX retail shares have directly profited from this. Whilst other strong stocks are profiting indirectly.
There are several ways to benefit from the huge rise in online shopping. Businesses don't need to have a website selling products to profit to profit from e-commerce..
Some other businesses are also offering services like distribution centres or e-commerce support services.
Here are two ASX shares benefiting from e-commerce:
Goodman Group (ASX: GMG)
Goodman is one of the world's largest industrial integrated property groups with operations in Australia, New Zealand, Asia, Europe, the UK, North America and Brazil. It owns, develops and manages industrial properties.
The business says that well-located industrial real estate is recognised as essential infrastructure for the digital economy, making it a highly sought-after asset class. Significant rental growth is expected to support valuation growth in FY22.
At 30 September 2021, it had $62 billion of assets under management (AUM). Goodman is expecting AUM to continue growing to around $70 billion by June 2022. It revealed rental income growth of 3.2% when it released its update for the three months to September 2021.
The high demand is helping the ASX share's occupancy remain high at 98.4% as customers seek to improve their supply chains.
Project completions and deployment of capital into increased development activity is expected to support additional growth in earnings. At the end of September 2021, work in progress (WIP) was $12.7 billion, with an annual production rate for the year expected to average approximately $6.8 billion.
Pre-commitments have a long weighted average lease expiry (WALE) of 14 years. The WIP has a forecast yield on cost of 6.8%.
Citi currently rates it as a buy, with a price target of $26.
Brickworks Limited (ASX: BKW)
Brickworks may be well-known for its bricks, roofing and other building products. It could also be famous for its long-term shareholding of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
However, the business is making a lot of progress with its joint venture industrial property trust which it shares with Goodman.
This trust is where Brickworks sells excess land no longer needed by the building products division into the trust. Goodman then prepares the land for a quality industrial property to be built on it. Once a lease pre-commitment is secured, the serviced land can then be used as security with debt funding to cover the cost of constructing the facilities.
Brickworks says that it has seen strong demand and sustained growth in the value of the property trust over a number of years. Management believe the COVID-19 pandemic has only fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions.
The ASX share should have recently completed one of Australia's biggest warehouses for one of the world's biggest e-commerce companies – Amazon. Brickworks is also building a huge distribution warehouse for Coles Group Ltd (ASX: COL). The Coles facility is expected to be completed towards the end of 2022.
In the last several months, a number of new tenants have pre-committed to facilities at the Oakdale West industrial estate. That includes a 35,500 square metre facility for Woolworths Group Ltd (ASX: WOW), a 32,000 square metre facility for Australia Post and an 11,000 square metre warehouse for Xylem.
The completion of these facilities, and the long pipeline of other pre-committed developments, will result in an increase in leased assets of around $1.2 billion and an increase of gross rent of $50 million within the property trust over the next two years.
