Daily ShareChat: Property for Industry

By Jenny Ruth

Tuesday 1st March 2011

Property for Industry's $18.2 million annual distributable profit was ahead of her $17.6 million forecast, says Buffy Gill, an analyst at Goldman Sachs & Partners.

"This was driven by lower than expected current tax at 11.4% versus 19.4% in the previous comparable period, driven by a number of tax adjustments as well as increased lease incentives," Gill says.

PFI's modes 0.7% decline in property valuations was in line with her expectations that its prime quality industrial assets would stablilse.

Underlying fourth quarter rentals were up 1.6% and annual rentals were up 3.5%, driven by new developments, the acquisition of Niall Burgess and rent reviews, and occupancy at 99.5% remains resilient, she says.

"PFI is, in our view, a quality stock with a track record of delivering consistent dividends-per-share growth and proven ability to add value for investors via the recycling of assets through the cycle," Gill says.

Nevertheless, with the shares trading at $1.15, PFI's current yield of 6.2% is ahead of her fair quality yield of 7% and its historical average of 6.6%. The stock is also trading at a premium to her realisable net tangible assets valuation of $1.09.

"We feel PFI's premium still seems a little high in the current environment of low earnings growth and limited positive catalysts."

Recommendation: Sell.

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