Shopping Centres Australasia (ASX:SCP) share price lifts off on strong FY22 outlook

The company offered strong forward guidance for the full 2022 financial year.

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Key points

  • Shopping Centres Australasia share price higher on strong guidance
  • The dividend payout increased
  • NPAT surged year-on-year

The Shopping Centres Australasia Property Group (ASX: SCP) share price is marching higher, up 4.3% in early trade.

Shares closed yesterday at $2.80 and are currently trading for $2.92.

Below we take a look at the company's financial results for the half year ending 31 December 2021 (1H FY22)

Shopping Centres Australasia share price lifts on strong guidance

  • Net Profit After Tax (NPAT) of $432.4 million, up 320.2% from 1H FY211.
  • Funds From Operations increased 30.4% year-on-year to $94.3 million
  • Investment property portfolio value increased by $426.4 million during the half to $4.426 billion
  • Dividend of 7.20 cents per share, up 26.3% from the corresponding half year

What else happened during the half year?

Shopping Centres Australasia attributed much of its half year NPAT surge to an increase in the fair value of its investment properties.

It also reported the boost to its investment property portfolio came from a $386.5 million valuation increase atop 7 acquisitions for $347.5 million (excluding transaction costs). This was partly offset by the transfer of properties to 'held for sale', valued at $307.6 million.

The company's cost of debt stands at 2.4% per annum. Gearing lifted slightly during the half year, to 32.5% as at 31 December up from 31.3% on 30 June. It said this was mostly related to the new asset acquisitions during the half.

Portfolio occupancy also improved to 98.1% by gross leasable area (GLA) as at 31 December 2021. GLA stood at 97.4% on 30 June.

What did management say?

Commenting on the half year results, Shopping Centres Australasia's CEO, Anthony Mellowes said:

Our convenience-based centres have remained resilient. Specialty tenant sales grew, while supermarket sales were flat compared to the elevated levels in the prior year. Leasing spreads and cash collection rates were impacted by lockdowns in New South Wales and Victoria but improved toward the end of the half year period.

Shopping Centres Australasia's chief financial officer, Mark Fleming added:

Pleasingly, our earnings per unit forecast for FY22 is now above the pre-COVID level. This has been the result of solid operational performance in a challenging environment and a strong balance sheet enabling investment in acquisitions, developments and funds management.

Following the sale of assets to the SCA Metro Fund our gearing will be less than 29%, 70% of our debt will be fixed or hedged and we will have over $450 million of cash and undrawn facilities.

What's next?

The company will launch a new fund with GIC (the SCA Metro Fund) in the second half of the financial year. It will sell 7 seed assets to the fund for $284.5 million, targeting an initial fund size of $750 million.

Shopping Centres Australasia's share price also looks to be getting a boost from the company's guidance for FY22, which is for Funds From Operations (FFO) per share of "at least" 17.5 cents per share. That's up 18.6% from FY21. Adjusted Funds From Operations (AFFO) guidance was given at "at least" 15.2 cents per share, an increase of 20.5% year-on-year.

That's all assuming "there are no further major outbreaks of COVID-19, no significant new government restrictions, and no further acquisitions".

Shopping Centres Australasia share price snapshot

The Shopping Centres Australasia share price has marched 20% higher over the past 12 months, well outpacing the 4% gain posted by the S&P/ASX 200 Index (ASX: XJO) over that same time.

So far in 2022, Shopping Centres Australasia shares are down 8%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Shopping Centres Australasia Property Group. 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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