The GPT Group (ASX: GPT)

The GPT Group is an Australia-based vertically integrated diversified property company that owns and manages a portfolio of Australian office, logistics and retail assets.

Recommendation Rationale – SELL at AUD 4.65

• Resignation of CFO: On 29 September 2023, GPT’s Chief Financial Officer (CFO) resigned to accept the role of CFO at Charter Hall.
• Credit Ratings Change: On 1 December 2023, the Company announced that the credit ratings agency, S&P has changed its long credit rating to ‘A-‘ from ‘A’ previously.
• Financial Performance: During H1 FY23, GPT’s funds from operations and distribution per security reduced by 3.0% and 1.6% year-on-year, respectively.
• Technical Indicator: The momentum oscillator 14-Day RSI (~78.87) is approaching the overbought zone; and thus, price can face correction in the short term.
• Overvalued Multiples: On a forward 12-month basis – key valuation multiples (EV/Sales, and Price/Cash Flow) are higher than median of Residential & Commercial REITs industry. Moreover, its dividend yield is lower than the industry median of 5.9%.

GPT’s 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 closing price of AUD 4.65 (as of 14 December 2023).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. 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 14 December 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.

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