Mirvac Shares Rise Ensuring Steady Growth

Mirvac Group‘s [ASX:MGR] rose 1.43% this morning.

However, the business is still under pressure after suffering from the financial crisis which occurred earlier this month.

Despite their growth, Mirvac’s earnings ratio has been dipping since 2007.

For their shares to be at such an affordable rate is a very rare occurrence.

Watermark Funds head of financial, Hamish Chalmers states:

We know why they are under pressure — REITs are negatively correlated with bond yields: when bond yields rise, real estate stocks fall. However, these companies are only modestly levered and their product remains in high demand…

Mirvac still sees a solid revenue, with a profit margin of 53.71% of revenue and an operating margin of 34.93%.

Their market cap now sits on $7.904 billion

Mirvac’s current state

Mirvac has announced plans for a market buyback program as part of its capital allocation strategy.

Their portfolio remains strong as they are focusing on urban areas as well as health, tourism and education markets in order to compensate for the challenge in the retail sector.

Mirvac Chief Executive, Ms Lloyd-Hurwitz, stated:

The strategic positioning of our portfolio is reflected in the strong metrics we’ve maintained in the first half of the year; our specialty sales growth of 5.2 per cent, for example, is well ahead of our peers.

Analysts believe that Mirvac’s share price will fall relative to the industry over the next couple of months.

Mirvac’s future innovation

Smart Solar Storage is working alongside Mirvac in order to develop the ultimate ‘house with no bills’ within Melbourne’s middle suburbs.

The development project will act as an experiment, and a selected family will be placed into the experimental home for a 12-month period.

The purpose of the experiment is to govern if the family can live an entire year with the absence of gas or electricity bills.

The home will have solar panels and battery storage installed throughout the house with a range of other energy saving devices in order to achieve this goal.

This project is a part of Mirvac’s strategy to reduce carbon issues within modern housing.

Mirvac hopes to make huge impacts regarding climate change and housing affordability.


Ryan Clarkson-Ledward,
For, Money Morning

PS: Australian Real Estate is a tough platform and requires the necessary approach in order to capitalise. Terence Duffy’s free report ‘Australian Real Estate Game Plan’ outlines the key importance in real estate approach.   

Ryan Clarkson-Ledward is an Editor at Money Morning.

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