Ferret's Stock to Watch: WATPAC LIMITED 08:49, Thursday, 11 May 2006
PROPERTY DEVELOPMENT COMPANY WITH IMPRESSIVE PROFIT TREND
Sydney - Thursday - May 11: (RWE Aust Business News) ****************************************************
OVERVIEW ********
Watpac Ltd (ASX:WTP) is continuing an impressive profit trend evident since 2000.
At the annual meeting last November, chairman Kevin Seymour said results for the year to June 30 had continued the trend in company performance over the last six years.
Since 2000, after-tax profit grew by 400 per cent, net tangible assets had grown from $19.29 million to $39.8 million in 2005, and return on shareholders' funds has averaged 21.2 per cent.
Work in hand had grown from $81 million to $420 million.
Ferret can bring some of these figures up to date because the company yesterday reported its after-tax profit for the current year to June 30 will be significantly greater than that achieved in the previous 2004/05 year.
The 2004/05 year produced an after-tax result of $10.529m and the forecast for the 2005/06 year is in the range of $15m-$16.m, which equates to an increase of between 42.4 and 51.9 per cent.
Mr Seymour said in a statement to the ASX yesterday that this was a pleasing and satisfying result and continued the exceptional growth in company profitability over recent years.
All divisions are forecast to contribute to the final 2006 results, including an increased contribution from the Construction Division that has improved on the tough market conditions of the 2004 and 2005 years.
Mr Seymour confirmed that company policy of distributing dividends to shareholders will continue in line with previous payout ratios.
He said this financial performance is a direct result of the implementation of the company's five-year strategy to strengthen its core activities of property and construction in Queensland, including growing those activities into the NSW market.
The future implementation of strategy embraces the tactics of diversification, expansion of property development activities including the NSW market and acquisitions or mergers of appropriate value-adding businesses.
Mr Seymour said that "while profits continue their upward trend the company is focused on creating shareholder value by acquiring businesses that can bring valuable experience and superior performance to our current divisions".
The company's core construction business in Queensland continues to remain strong and has emerged as one of the few remaining Tier One building companies with a significant presence in the market with record work on hand.
SHARE PRICE MOVEMENTS *********************
Shares of Watpac rose 6c to $2.53 yesterday. Rolling high for the year was $2.62 and low 90c. Dividend is 10c, showing a yield of 3.95 per cent. Earnings per share is 15.45c and p/e ratio 16.38. The company has 78.7 million shares on issue with a market cap of $194.5 million.
Watpac's latest project is the Skyline Apartments on which work has already started.
It is a residential development located in the riverside precinct of Brisbane's CBD.
Skyline will comprise a 190 strata residential unit tower above two retail tenancies and basement parking.
The apartment complex will include resort style amenities, such as a gym, steam room, heated pool and BBQ features and will be the only CBD residential building with a full-sized tennis court.
The apartments are positioned to capture the essence of inner city riverside living and over 90 per cent of the apartments are afforded river views.
The project has an end value of $160 million and is being undertaken as a joint venture between Watpac, Seymour Group and Ariadne Australia. Prior to construction commitment last July, over $90m of pre sales were secured.
The project is due for completion in late 2007.
Last November chairman Seymour said there had been many changes since the previous AGM, all of which had contributed to a positive outcome for the company.
The highlights of these were led by the successful integration of its New South Wales construction business, Grant constructions, together with the focus on its property business, both through increased volume in Queensland and the commencement of a property division in NSW.
"We have consolidated the management structure of the refurbishment division with Keybuilt, Watpac's small works company, and spent considerable time in the reassessment of risk and how we identify and manage that risk in our business," Mr Seymour declared.
BACKGROUND **********
Listed on the Australian Stock Exchange in 1985, Watpac is one of Queensland's leading construction and property groups.
The company's operations encompass a variety of activities across the eastern seaboard of Australia for a diverse range of clients and investment groups.
Watpac has successfully delivered more than $4 billion worth of projects and has been the name behind a number of high-profile developments across the state.
With a solid track record of year on-year profit growth, Watpac continues to provide impressive returns to shareholders and is committed to improving its long-term profitability through a sustainable program of geographical expansion and diversification.
ENDS
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WTP Price at posting:
0.0¢ Sentiment: LT Sell Disclosure: Not Held
