Stock Spotlight: Lendlease Group (ASX:LLC)

This week's Stock Spotlight is ASX-listed Lendlease Group.

About Lendlease Group.

Lendlease Group operates as an integrated real estate and investment company in Australia, Asia, Europe, and the Americas. It operates through Investments, Development, and Construction segments. The Investments segment owns and/or manages investments, including residential, office, retail, industrial, retirement, and infrastructure investment assets. The Development segment develops inner-city mixed-use developments, apartments, communities, retirement, retail, commercial assets, and social and economic infrastructure. The Construction segment provides project management, design, and construction services primarily in the commercial, residential, mixed use, defense, and social infrastructure sectors. The company was founded in 1958 and is headquartered in Barangaroo, Australia.

Source: Yahoo Finance

Key Stats

Source: Yahoo Finance, ASX. Data as of 18/09/24.

Growth Potential

• Undertaking global asset divestments to become more Australian focused – this brings with it execution risk.
• Balance sheet leverage is expected to fall to 5-15% range by FY26.
• FY25 guidance includes one of sales proceeds which are non-recurring.
• Upside risk to consensus expectations from better than expected pricing achieved on assets for sales.
• We expect buyback and capital management initiatives once divestments are secured.
• Post the major strategy shift, LLC will become a simpler and potentially more attractive business.
• Better than expected uplift in the development pipeline.
  

Key Risks

• Further provisions to the existing problem projects.
• New projects are mispriced from a risk perspective.
• Cut to dividends.
• Sudden increases in interest rates.
• Increase in apartments default rate.
• Any delays or execution problems in development and construction that sees margin being affected.
• Any net outflows from its investment management business.