S&P/ASX 300 Index (ASX: XKO) shares with good growth prospects could be ones to pay close attention to.
A smaller name can just as easily make a good return as some of the most well-known and analysed businesses.
Companies that are proving to be effective at executing their strategy may be able to generate good long-term returns.
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Lifestyle Communities Ltd (ASX: LIC)
This ASX 300 share develops, owns and manages "affordable independent living residential land lease communities." It has 28 residential land lease communities under contract, in planning, in development or under management. It's aiming to provide an affordable housing option for Australians aged over 50.
There is a growing number of people entering retirement age in Australia, meaning that more retirement communities and homes are needed. IBISWorld expects the Australian population aged 50 and older to increase by 2.1% during 2022-23, to reach 9,299,362 people, which is a useful tailwind.
Homes are "typically priced at 75% to 80% of the medium house price in the target catchment," with a 90-year lease over the land providing security of tenure.
Lifestyle Communities benefits from a site rental fee, which is indexed at the greater of CPI inflation or 3.5% per annum. The weekly site fee is approximately 20% to 25% of the aged pension after receiving the Commonwealth rental assistance. In the FY23 half-year result, site rental income rose by 16.6% to $17 million.
In the HY23 result, it said that it remains on track to deliver settlements in the range of 1,400 to 1,700 over the three years to FY25. As of HY23, the business had 3,334 homes sold and occupied and a total of 5,599 total homes in the communities, including ones that are under construction or awaiting commencement.
Over time, the business should benefit from growing deferred management fees, which are fees that it generates on the resale of the houses.
Audinate Group Ltd (ASX: AD8)
Audinate is a business that provides Dante, a 'networking solution' that the ASX 300 share called the "worldwide leader and used extensively in the professional live sound, commercial installation, broadcast, public address and recording industries."
The idea is that Dante replaces traditional analogue cables by transmitting synchronised AV signals to multiple locations at once, using just an ethernet cable.
One of the main attractions of the company's growth outlook is its expansion into the video market. Management point to research that shows the estimated total addressable market is at least $400 million for video networking, which is a large target for the ASX 300 share to aim at.
It's offering customers better, easier tools for their audio and visual needs.
Revenue is growing strongly – in the first half of FY23, the ASX 300 share saw revenue rise 39.3% to A$30.8 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 109% to A$4.3 million. Operating cash flow rose by 231% to A$1.8 million.
The medium-term looks bright, with the company saying the sales backlog was at "record levels" at the HY23 result.
