This report is an updated version of the report published on 8 September 2023 at 4:00 PM AEST. 

Goodman Group Ltd (ASX: GMG)

Goodman Group Ltd is an ASX listed integrated property group with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, and the Americas.

Recommendation Rationale – SELL at AUD 23.22

• Profit Booking: GMG has surpassed the R2 level recommended on 3 April 2023; and thus, it is giving a profit booking opportunity.
• Financial Decline: In FY23, GMG reported a 17% YoY advancement in operating profit while slightly reducing the gearing to 8.3%. However, FY23 statutory profit declined by 51% YoY.
• Emerging Risks: The macroeconomic headwinds, significant deterioration in consumer confidence, and rise in finance costs could impact the share prices.
• Technical Indicator: The momentum oscillator, 14-day RSI is trading ~71.96 levels, indicating the overbought zone. Thus, the stock price can face correction in the short term.
• Overvalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Book, and Price/Cash Flow) are higher than the median of the Residential & Commercial REITs’ industry.

GMG Daily Chart

 (Source: REFINITIV, Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY24E) (Illustrative)

Considering that the resistance level, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 23.22 (as 8 September 2023, at 1:05 PM AEST). 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 8 September 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

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