Little-known ASX real estate stock Cedar Woods Properties Limited (ASX: CWP) has been on the rise recently. It's up by 16.6% in the last 12 months, as we can see on the chart below. In comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) has only gained 4.09% in the past year.
Admittedly, Cedar Woods shares are still down by around 38% since their pre-pandemic high. But plenty of other ASX real estate stocks have not enjoyed similar recent recoveries. For example, the Dexus (ASX: DXS) share price is down by over 40% since the Covid crash, and has also lost 12% in the past year.
Image source: Getty Images
What is this business?
Cedar Woods says it strives to "create quality homes, workplaces and communities", with projects in Western Australia, Victoria, Queensland, and South Australia.
Its product mix ranges from "land subdivisions in emerging residential communities, to medium and high-density apartments and townhouses in vibrant inner-city neighbourhoods and supporting retail and commercial developments."
Solid performance
In the first half of FY23, the business was struggling amid a rising interest rate environment, but I think its full 2023 financial year performance was decent. The company generated net profit after tax (NPAT) of $31.6 million, which was a reduction of 16% but, I think, still a solid result given the economic headwinds.
The ASX real estate stock reported a strong balance sheet with moderate debt, and it has "significant undrawn finance facilities available." The business said that at the end of June 2023, its net bank debt stood at $195.8 million, with gearing (net bank debt to total tangible assets (less cash)) being 25.9% – that's in the middle of its target range.
Promising recent performance
Interestingly, in the fourth quarter of FY23, sales jumped by 58% year over year. The company said the market is "being supported by increased inbound migration, high employment, and the low supply of rental properties in the established market."
It also reported at the end of FY23 that it had forward presales of more than $448 million, compared to $500 million in the prior corresponding period, so it hasn't seen much of a decline. Most of the $448 million will settle in FY24, with the balance to settle in FY25.
The ASX real estate stock also advised that the medium and longer-term is underpinned by a pipeline of more than 10,000 undeveloped dwellings, lots, and offices across four states.
There are several new projects that are expected to contribute to earnings from FY24, and earnings guidance for FY24 will be provided when there is "greater clarity on sales volumes, the company-wide delivery program and the sale of the Williams Landing Shopping Centre."
Is the Cedar Woods share price good value?
I believe the ASX real estate stock could be expected to generate good earnings and pay solid dividends moving forward.
In FY24, it's projected to make earnings per share (EPS) of 47.2 cents, representing a forward price/earnings (P/E) ratio of 11, and it could pay a grossed-up dividend yield of 6.6%, according to Commsec.
The financial picture could improve again in FY25, with a current projection of 53.7 cents of EPS and a dividend per share of 30 cents. That would mean the stock is valued at under 10x FY25's estimated earnings with a possible grossed-up dividend yield of 8.25%.
Time will tell if today's share price is good value. However, the company's ongoing profitability could support a buy case for the Cedar Woods share price at $5.19.
