LendLease’s net profit rose 12% for the half year ending 31 December 2016, underpinned by earnings growth in all its major operating segments. The development segment was driven by Australia while the construction segment was supported by improved performance in the Americas. The interim distribution announced was AUD 0.33 per share unfranked, an increase of 10% compared to the prior corresponding period.
LLC remains well positioned, given a strong pipeline of development projects, construction backlog revenue and total residential pre-sales. In addition, the company has secured a number of significant construction contracts and are a preferred bidder in a GBP 2 billion project in London.
We believe the company remains attractively valued and is well positioned to continue its strong growth momentum. The buoyant local construction sector and the potential fiscal stimulus in the US could provide a further boost to the company’s earnings. Whilst there are some lingering risks in the apartment segment, the reported default rate was about 1%, a better outcome than the market had feared.