AV Jennings released numbers on Friday, and as anticipated by the market, reported a drop in both revenues and profits:
Revenue down 4.8% from 422M to 402M
NPAT down 12.7% from $40.9M to 35.7M
EPS down 13.1% from 10.7c to 9.3c
NTA up 4.3% from 95c to 99c
The drop in profits was mainly due to delays with project approvals and some construction. The good news is that not only is AVJ still a very steady earner (selling for a ludicrous PE multiple of 7.8) and is trading at a 27% discount to net assets – based on cost price of those assets.
Considering that over 60% of AVJ’s land bank is in Sydney and Melbourne, significant further upside exists beyond this 99c NTA, in spite of the fact that most of the land is located on the urban fringe.
I’ll be looking to add over the coming months, while I expect AVJ to grow at a modest pace (Should be a big kick up in FY18 as delayed projects flow through) I’m happy to hold onto these, while I sit back and collect. As a real estate investment, AVJ is like a $1M house selling for $730,000, with net rent of $961 per week, 0 vacancy, stable tenants and no stamp duty.