Lend Lease Group (LLC)

By Jason Fittler

Lend Lease Group is an international property and infrastructure group.

Lend Lease; manage a portfolio of properties in Australia, the UK and the USA; develop new properties, including apartments, retail, commercial and healthcare facilities; develop and maintain infrastructure, including ports, rail, energy, roads and defence; provide project management, design and construction services to international customers.

LLC is an experienced builder operating in a cyclical and competitive market. LLC has no real competitive advantage. In recent years LLC has benefitted from strong resource related demand within Australia.

Weak economic conditions have hampered demand in the UK and US. LLC now stands to benefit from any recovery in these markets, although the Asia Pacific region still comprises the majority of income.

LLC’s exposure to cyclical fluctuation is offset some by its diversification, as such revenue is relatively stable.

The analyst consensus forecasts 1.8% earnings growth in 2013 and a further 3.9% in 2014. LLC currently trades at a 10.4x multiple of 2012 earnings, a lower multiple than competitors such as GPT (11.3) and LEI (13.2x).

LLC historically pays out 40% of earnings as a dividend, forecast 2013 dividend yield is 4.3% not franked.

Net debt amounts to 78.7% of equity.

The market has conservative expectations of LLC going forward, however, weak economic conditions will limit any upside for LLC.

The analyst consensus price target represents a 12.4% upside.

We are happy to continue to hold this company for now and will continue to watch economic growth figures.

For more information on Lend Lease Group (LLC) please contact us on 07 4771 4577.