Lifestyle Communities Ltd (ASX: LIC) shares are under pressure again on Wednesday.
At the time of writing, the ASX 200 real estate stock is down 6% to $8.49.
This follows the release of the retirement communities company's full year results.
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ASX 200 real estate stock tumbles on FY 2024 results
- Annuity revenue up 15.9% to $54.7 million
- Operating profit after tax down 25.6% to $52.9 million
- Operating earnings per share down 29.4% to 48.1 cents
- Final fully franked dividend of 5 cents per share
What happened during the year?
For the 12 months ended 30 June, the ASX 200 real estate stock posted an operating profit after tax of $52.9 million, which was down 25.6% from $71.1 million a year earlier.
Management advised that its profits were impacted by lower new home settlements (FY24: 311 v FY23: 356) and increased pre-sales and marketing costs for new projects that commenced during the year.
This was partially offset by a 15.9% increase in annuity income from site rentals and deferred management fees. They were up from $47.2 million in FY 2023 to $54.7 million in FY 2024 due to an increased number of homes under management and strong price growth in established home resales.
In light of the above, the ASX 200 real estate stock cut its final fully franked dividend by 16.7% to 5 cents per share. This brought its full year dividends to 10.5 cents per share, which is down 8.7% year on year.
Broker reaction
Analysts at Goldman Sachs have been looking over the result. They appear concerned by its some commentary on settlements, which are run-rating well below expectations. This could explain why its shares are tumbling today. Goldman said:
Management noted customer sentiment has been negatively impacted due to recent media coverage, with 27 settlements as at 12 August and an additional 228 homes sold and available for settlement during FY25 (plus 120 in FY26).
Simply annualising the settlement run-rate in FY24 YTD implies ~230 FY25 settlements (vs 400 GSe), though we would note (a) This assumes minimal additional home sales through FY25 (i.e., only converting the existing book of sales); (b) LIC typically has a 2H settlement skew, averaging 40%/60% 1H/2H over the past 5 years; (c) Winter is usually a slower period for LIC due to property market seasonality (i.e., the Jul-Aug run-rate likely not representative of the year); and (d) maturity of community pipeline including Riverfield and Phillip Island which are now ramping into FY25. The outlook for sales and settlements, including lead indicators, will be a key focus for the conference call.
