• Net Profit After Tax: $15 million for the first half of FY25.
• Revenue: $196 million from 479 settlements, a 59% increase over the previous year.
• Earnings Per Share: $18.02, up 468% from the previous year.
• Interim Dividend: $0.10 per share, fully franked, up 25% on the prior corresponding period (PCP).
• Net Sales: 654 lots contracted, compared to 529 in the previous year.
• Pre-Sale Contracts: $642 million, up from $525 million in the previous year.
• Gross Margin: Stable at 26%.
• Total Assets: $779 million as of December 31, up 5% from June 30.
• Net Bank Debt: $185 million, with gearing at 24% of total tangible assets less cash and 40% of equity.
• Interest Cover: 6.2 times, exceeding the facility covenant of 2 times.

• Warning! GuruFocus has detected 7 Warning Signs with ASX:CWP.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cedar Woods Properties Ltd (ASX:CWP) reported a significant increase in net profit after tax to $15 million and revenue of $196 million, marking a strong improvement over the previous year.
• The company achieved a record $642 million in pre-sale contracts, up from $525 million the previous year, indicating strong future revenue potential.
• Cedar Woods Properties Ltd (ASX:CWP) declared an interim dividend of $0.10, fully franked, which is a 25% increase compared to the prior corresponding period.
• The company is leveraging strategic partnerships with QIC and Tokyo Gas to access larger development sites and generate regular fee income, enhancing its growth strategy.
• Cedar Woods Properties Ltd (ASX:CWP) is actively pursuing an ESG strategy, with significant investments in climate-responsive developments and renewable energy projects, such as the Microgrid at Eglinton Village in WA.

Negative Points

• Sales conditions in Victoria are currently weak, although improvement is expected in 2025 due to affordability advantages.
• The construction sector in Queensland is experiencing capacity constraints, which could impact project timelines and costs.
• Despite strong sales in some regions, the overall sales volumes in Western Australia have come off from previous high levels, indicating potential market saturation.
• The company has increased finance costs due to borrowing cost capitalization, reflecting the stage of their developments.
• Cedar Woods Properties Ltd (ASX:CWP) faces elevated risks in the construction sector due to the number of defaults among builders, although they have managed to mitigate this risk through strong relationships and due diligence.

Q & A Highlights

Q: Can you explain how the joint ventures with QIC and Tokyo Gas are structured and how they impact cash flow? A: The joint ventures are structured differently. With QIC, they own the land, and Cedar Woods contributes half of the assessed value after securing approvals and pre-sales. Both parties co-fund the development and share profits equally. For Tokyo Gas, Cedar Woods identifies and buys sites with a 51% stake, managing development and sales, and profits are shared close to equally. These ventures are reflected in the cash flow statement as investments are made.

Q: Is the inventory from joint ventures included in your total inventory count? A: Yes, the inventory from existing joint ventures, including the Robina Project with QIC and the projects with Tokyo Gas, is included in the total inventory count of 9,700 lots.

Q: Will the inventory count increase, or will it remain below 10,000 lots? A: We are confident in achieving earnings growth without needing further acquisitions for the next few years. However, we are actively seeking opportunities, and the inventory count may increase depending on acquisitions, but it is not a specific target to maintain it below 10,000 lots.

Q: What are the expectations for FY26 in terms of built form and margin profile? A: We expect to grow settlement volumes and revenues in FY26, with contributions from built form projects, including apartments in South Australia. Margins are expected to grow in FY25 and further in FY26.

Q: Does the revenue for the first half include the sale of excess land at Williams Landing and Eglinton? A: The revenue includes the sale of two sites at Williams Landing shopping center, but not Eglinton, which is expected to settle soon and contribute to the second half.

Q: What are the key contributors to the second-half revenue? A: Key contributors include Bloom Apartments in South Australia, stages at Fletcher's Slip, and projects in Queensland like Flourish and Ellendale. WA projects will also contribute significantly.

Q: How do you view the current sales volumes and future expectations? A: Sales and inquiry levels are strong across the country, with Queensland performing best, followed by WA and SA. Victoria is weaker but expected to improve. The supply shortfall will sustain demand, and easing interest rates should support sales volumes.

Q: How is the construction sector affecting your projects, and are there opportunities due to industry challenges? A: The construction sector faces pressure, but we have strong relationships with builders and conduct thorough assessments to mitigate risks. There are opportunities from developers unable to deliver projects, and we are exploring these cautiously.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.