Property valuation and consultancy firm LandMark White (ASX: LMW) has delivered a bumper increase in profits for the 12 months to 30 June 2018 after releasing its results to the market today.
The company reported a full year profit before tax of A$5.8 million, an increase of 143% on financial year 2017.
The acquisition of MVS National contributed to the strong profit result, as it delivered an increase in market share, diversification, higher growth margins and synergy savings in excess of expectations.
LMW, which has more than 40 offices and almost 400 staff across Australia, posted a profit after tax of $4.1m, representing an increase of 155% on 2017.
EBITDA figures of $6.6m in 2018 was up 144% on the prior corresponding period for LMW, which has also significantly increased its footprint in regional Queensland, New South Wales and Victoria.
Its revenue from owned businesses increased 72% in 2018 to A$43.2m, largely due to the acquisition of MVS on 31 May, 2017. The MVS acquisition provides a broader, more diversified spread of revenue sources with residential valuations (predominantly for bank lending purposes) falling from 67% to 53% of revenue.
The company’s statutory services business contributed A$13.4m of revenue, representing about two thirds of overall revenue growth. This demonstrates a diversification away from a reliance on mortgage valuations.
Earnings per share rose 8% to 5.44c.
High yielding stock
The final fully franked dividend of 2c a share takes the full year dividend to 4.6c, an increase of 2% on full year 2017.
This dividend marks the 19th consecutive half-year payment and will be paid on 19 September. The ex-dividend date is 31 August.
The average yield since financial year 2010 is 13.3%, including franking credits.
Market outlook for 2019
LMW benefits from a booming property market due to rising sales and developments. However, the company can also perform well in a property downturn due to a recent increase in its scale, and its government and insurance divisions.
A fall in investment property values can lead to more valuation work in LMW’s government services division.
The company is forecasting a 17% increase in profit before tax to A$6.8m for financial year 2019. It also expects a 4% increase in revenue to A$45.1m and a 13% rise in earnings per share to 6.16c.
A recovery in the mining sector is likely to result in improving market activity in Perth and Brisbane and the regional areas of Western Australia and Queensland.
Whilst commercial construction is set to grow from rising building approvals, supported by strength in the office and education sectors.
Demand for valuation services from government departments will continue to provide growth opportunities.
LMW plans to focus on expanding its insurance and commercial valuation arms and statutory services and pursue merger and acquisition opportunities with valuation businesses.