Ingenia share price slips despite record home settlements and 38% profit bump in FY22

Despite the challenges of COVID-19 and poor weather, Ingenia managed to increase its profit and distributions to shareholders in FY22.

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Key points

  • Ingenia has today reported a 38% increase to its statutory profit in FY22 
  • Ingenia has increased its full-year distributions to shareholders by 4.8% 
  • Based on today's share price and the full-year distribution for FY22, Ingenia is offering investors a yield of 2.3%

The Ingenia Communities Group (ASX: INA) share price is wobbling today after the seniors housing and family holidays company released its full-year FY22 results.

Ingenia shares started the session on Wednesday 1% lower at $4.62. They gradually rallied after the company released its results shortly after the market open to trade as high as $4.73.

At the time of writing, the Ingenia share price has slipped 0.43% to $4.65.

What did Ingenia Communities report?

The highlights of Ingenia's report are below:

  • Revenue of $338.1 million, up 14% on the prior corresponding period (pcp)
  • Statutory profit of $100.6 million, up 38% pcp
  • Underlying profit of $87.9 million, up 14% pcp
  • Earnings before interest and taxes (EBIT) of $101.7 million, up 8% pcp
  • Underlying earnings per share (EPS) of 23.3 cents, down 1% pcp
  • Operating cash flow of $114.9 million, down 17% pcp
  • Record 409 new home settlements "with significant growth forecast in coming years"
  • Strong balance sheet maintained with $325 million in cash and undrawn debt
  • Met FY22 guidance with EBIT growth of 8% and underlying EPS down 0.3 cents per share pcp
  • Final distribution of 5.8 cents per share to be paid on 22 September
  • Full-year distribution of 11 cents per share, up 4.8% pcp.

What else happened in FY22?

Ingenia has a residential property development and management division and a holidays division.

The company said its operating cash flow was lower despite a growing revenue base due to lost tourism earnings and reduced settlements resulting from COVID-19 impacts and bad weather.

In the residential real estate business, it settled 409 new homes and expanded its development pipeline by more than 50% to 6,580 sites.

lngenia CEO Simon Owen said: "During the period, we built a greater exposure to markets benefiting from internal migration and price growth, with 90% of our future development pipeline now located in Queensland and high growth coastal/regional markets."

Ingenia described its residential rental income as "stable and predictable – and is growing". Rental revenue went up 6% in FY22 with "continued high occupancy".

Regarding the holidays division, Ingenia says its 40 East Coast holiday parks are "benefitting from buoyant domestic travel demand".

Underlying EPS fell "due to an increase in securities on issue following the $475 million equity raising in November 2021, and COVID/supply chain impacts on holidays and development earnings".

The company said it finished the year with "a well-positioned balance sheet" and with "debt capacity and capital recycling to underpin future investment".

What did management say?

Owen said:

The result showcases that Ingenia's key strategic drivers remain intact – an ageing population, solutions to address housing affordability, internal migration patterns and domestic travel to support long term demand.

The Group has continued to enhance its scale and market reach, with total assets increasing by more than 60% over the year.

What's next?

In FY23, Ingenia says it expects a "material increase in the contribution from the operating business as it benefits from an expanded residential rental base and increasing holiday occupancy and rates".

Owen said:

We remain confident in the ability of our development business to deliver growth, and prices remain affordable for downsizing residents, with flexibility to respond to changes in market conditions and consumer demand.

The Group has multiple projects commencing in FY23, with a target of 2,000 — 2,200 settlements over the three years to end FY25. Ingenia's balance sheet provides capacity for this growth.

Regarding the holidays business, Owen said:

We expect ongoing demand as families and grey nomads continue to value local travel over international. Forward bookings through to August 2023 are up more than 30% (versus 2022) and we are seeing a trend towards the booking out of shoulder seasons, which will support annualised occupancy growth.

Ingenia provided FY23 guidance of 30% to 35% growth in EBIT and 5% to 10% growth in underlying EPS. It is targeting 525 to 550 new home settlements in FY23.

Ingenia share price snapshot

The Ingenia share price has fallen 27% year to date. Based on today's share price and the full-year distribution for FY22, Ingenia is offering investors a yield of 2.3%.

Motley Fool contributor Bronwyn Allen 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 Scott Phillips.

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