PROPERTY developer Australand Holdings is a strong buy opportunity, according to a tip by DJ Carmichael.
PROPERTY developer Australand Holdings is a strong buy opportunity, according to a tip by DJ Carmichael.
The stockbroking firm believes the $900 million diversified residential/apartment and land developer is trading at a heavy discount to the general property sector largely as a result of stock illiquidity.
Australand Holdings (ALZ) trades on a financial year 2002 prospective price per earnings ratio of 9.5 times and a yield of 7.5 per cent. In its weekly market brief, DJ Carmichael says this represents a discount to the sector, which trades at 14 times and a yield closer to 5 per cent.
“This discount arises primarily because of illiquidity, which excludes Australand from any index weighting,” the brief says.
However, all this may be about to change, according to DJ Carmichael.
“A recent placement of $1.65 to institutions aimed at diluting down a major shareholder and injecting liquidity has worked with the average daily volume since February 11 being 500,000,” the brief says.
This is well above an average of 260,000 share trades per day needed for ASX200 index inclusion.
“We believe Australand is a strong candidate for index inclusion, which we expect will lead to a re-rating,” the brief says.
“Underlying our favourable view is a strong development pipeline, which supports earnings per share growth of 5-8 per cent in the medium term.”
Australand is the developer of Maddison 167, Joondalup City Kingsbury, Mayfair Apartments in West Perth and Northbridge Parkview.
Tap into oil
Tap Oil managing director Paul Underwood has espoused the virtues of the offer to takeover Arc Energy NL, citing the natural synergy between the two entities. However, Arc Energy is advising its shareholders to hold off from selling its shares until the directors have made a formal assessment of the offer, which closes in four weeks.
Arc Energy directors are waiting on an independent report by PricewaterhouseCoppers, which in turn has appointed Global Capital Resources Pty Ltd to undertake the valuation of petroleum assets.
At an open briefing with corporatefile.com.au, Mr Underwood said the offer of one Tap share for four Arc Energy shares represented good value.
“Without the Tap offer we consider it likely that Arc will need to raise additional capital to continue with even a modest ongoing exploration program,” Mr Underwood said.
“With Tap and Arc combined this will not be necessary (given present circumstances) and an aggressive exploration effort will be possible to accelerate value creation.”
But he said it was unlikely the merger would create any short-term windfall.
“Growth in shareholder value is expected from a sustainable exploration program, hopefully generating a diversified portfolio of production assets in due course,” Mr Underwood said.
Tap’s assets are focused on the Carnarvon Basin, including acreage in the Barrow Delta plays and the Varanus island strategic production facility, where Harriet oil/gas production is processed.
Tap also has a 15 per cent interest in the Woolybutt oil field, which is due for production start-up in 2003.
Arc Energy’s assets are focused in the Perth Basin and include the Hovea discovery onshore and the offshore Cliff Head discovery. Arc also owns the Dongara gas field.
Tap Oil earlier this week announced the successful spudding of the Hoover-1 exploration well, 11 kilometres south of Varanus Island at 862 metres depth, with drilling to continue to the planned depth of 1,876 metres.
The stockbroking firm believes the $900 million diversified residential/apartment and land developer is trading at a heavy discount to the general property sector largely as a result of stock illiquidity.
Australand Holdings (ALZ) trades on a financial year 2002 prospective price per earnings ratio of 9.5 times and a yield of 7.5 per cent. In its weekly market brief, DJ Carmichael says this represents a discount to the sector, which trades at 14 times and a yield closer to 5 per cent.
“This discount arises primarily because of illiquidity, which excludes Australand from any index weighting,” the brief says.
However, all this may be about to change, according to DJ Carmichael.
“A recent placement of $1.65 to institutions aimed at diluting down a major shareholder and injecting liquidity has worked with the average daily volume since February 11 being 500,000,” the brief says.
This is well above an average of 260,000 share trades per day needed for ASX200 index inclusion.
“We believe Australand is a strong candidate for index inclusion, which we expect will lead to a re-rating,” the brief says.
“Underlying our favourable view is a strong development pipeline, which supports earnings per share growth of 5-8 per cent in the medium term.”
Australand is the developer of Maddison 167, Joondalup City Kingsbury, Mayfair Apartments in West Perth and Northbridge Parkview.
Tap into oil
Tap Oil managing director Paul Underwood has espoused the virtues of the offer to takeover Arc Energy NL, citing the natural synergy between the two entities. However, Arc Energy is advising its shareholders to hold off from selling its shares until the directors have made a formal assessment of the offer, which closes in four weeks.
Arc Energy directors are waiting on an independent report by PricewaterhouseCoppers, which in turn has appointed Global Capital Resources Pty Ltd to undertake the valuation of petroleum assets.
At an open briefing with corporatefile.com.au, Mr Underwood said the offer of one Tap share for four Arc Energy shares represented good value.
“Without the Tap offer we consider it likely that Arc will need to raise additional capital to continue with even a modest ongoing exploration program,” Mr Underwood said.
“With Tap and Arc combined this will not be necessary (given present circumstances) and an aggressive exploration effort will be possible to accelerate value creation.”
But he said it was unlikely the merger would create any short-term windfall.
“Growth in shareholder value is expected from a sustainable exploration program, hopefully generating a diversified portfolio of production assets in due course,” Mr Underwood said.
Tap’s assets are focused on the Carnarvon Basin, including acreage in the Barrow Delta plays and the Varanus island strategic production facility, where Harriet oil/gas production is processed.
Tap also has a 15 per cent interest in the Woolybutt oil field, which is due for production start-up in 2003.
Arc Energy’s assets are focused in the Perth Basin and include the Hovea discovery onshore and the offshore Cliff Head discovery. Arc also owns the Dongara gas field.
Tap Oil earlier this week announced the successful spudding of the Hoover-1 exploration well, 11 kilometres south of Varanus Island at 862 metres depth, with drilling to continue to the planned depth of 1,876 metres.
