Shopping Centres Australasia share price slips on FY22 results

The REIT reported positive figures to the market today but is wary of rising interest rates.

| More on:
Two laughing young women hold shopping bags and ride an escalator up to another level in a Scentre Group shopping centre.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Key points

  • The Shopping Centres Australasia share price is down on Tuesday despite the company posting a positive earnings report for FY22
  • Fears surround the REIT's adjusted funds from operations moving forward due to floating interest rates
  • Shopping Centres Australasia reports its sales are above pre-COVID levels

The Shopping Centres Australasia Property Group (ASX: SCP) share price is in the red on Tuesday amid the company delivering a mixed earnings report for FY22.

Shares of the managed real estate investment trust (REIT) currently swap hands for $2.83 each, down 4.07% on yesterday's closing price. The REIT sector is also in the red, with the S&P/ASX 200 A-REIT Index (ASX: XPJ) down 0.72%

Although Shopping Centres Australasia reported growth in its top and bottom lines in FY22, its outlook for the 2023 financial year is pessimistic.

Let's investigate some of the highlights of the company's results.

What did Shopping Centres Australasia report?

  • Revenue up 19% on FY21 to $350.3 million
  • Net profit after tax (NPAT) up 5.2% on FY21 to $487.1 million
  • Investment property portfolio value up 10.31% on FY21 to $4.46 billion
  • Adjusted funds from operations (AFFO) up 24.8% on FY21 to $169.5 million,
  • Net tangible assets up 11.5% on FY21 to $2.81 per unit

The company's strong top and bottom line performance was helped by higher sales figures in its shopping centres after bouncing back from COVID-19 restrictions.

Shopping Centres Australia reported it has mostly recovered from the impact of the virus.

Total sales were said to be 10% higher than pre-COVID levels in December 2019. Sales growth momentum also shot 4.5% higher in Q4 FY22.

What else happened in FY22?

The company also reported an uptick in cash collection from its creditors during the COVID-19 period. In fact, it reported a 100% cash collection rate. It cited lockdowns in 1H FY22 as a headwind that had stopped it collecting from creditors during that period.

Shopping Centres Australia also acquired seven convenience centres in FY22 in Queensland, New South Wales, and Victoria. The total value of the acquisitions was $341.9 million.

What did management say?

Shopping Centres Australasia CEO Anthony Mellowes said:

Over the last twelve months, our convenience-based centres have remained resilient. Our tenant sales are now 10% above pre-COVID levels. Leasing spreads and cash collection rates were impacted by lockdowns in New South Wales and Victoria during the first half of the year, but improved in the second half. We have made solid progress on our sustainability program, including completing our LED rollout, and the installation of solar panels on our WA assets.

What's next?

The company expects its adjusted funds from operations (AFFO) per unit, a key performance measure of REITs, to contract 1.96% from 15.30 down to 15, primarily due to floating interest rates.

However, the company has a medium to long-term vision of increasing its AFFO to 2-4% per annum. The strongest growth drivers for the company are expected to be property development and acquisitions in its shopping centre segment.

More than $300 million worth of estimated capital investment has been proposed to develop its centres over the next five years. Some activities include expansion, improvement, and rebuilding, as well as improving sustainability through clean energy solutions such as solar.

Shopping Centres Australasia share price snapshot

The Shopping Centres Australasia share price is currently down 5% year to date but up 6% in the last 12 months.

It's outperformed the S&P/ASX 200 Index (ASX: XJO) over the past year with the benchmark index losing 6% over the same period.

At the current share price, the company's market capitalisation is around $3.15 billion. 

Motley Fool contributor Matthew Farley 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.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »