Lend Lease Has Reached Resistence
Lend Lease has filled the price gap to $18.50 and appears to have found price resistance.
Our initial downside target is the April 9th low of $17.05.
Lend lease
ALGO Update: LLC Is Approaching Overbought Territory
Our ALGO engine triggered a sell signal in LLC into the ASX close at $17.88.
The “lower high” pattern is referenced to the October 17th high of $18.70.
Shares of LLC have risen about 16% since posting solid H1 results three weeks ago, which included a $500 million share buyback scheme over the next 12 months.
However, the internal momentum indicators are now approaching overbought territory.
We see strong technical resistance in the $18.15/20 area and expect the share price to revert back to the $17.20 support area over the near-term.
Lend Lease
Lendlease – Finding Support Near $15.50
Our Algo Engine generated a buy signal in Lendlease back in October. Since then the stock has moved down to find buying support at $15.50.
LLC is in the ASX 50 model and we expect buying support will soon see the share price recapture $17 in the weeks ahead.
Place a stop-loss order on a break back below $15.50.
Lendlease
Construction Arm Boosts Lendlease
Shares of property group Lendlease popped to an 18-month high of $15.84 in early trade as the company announced a sharp increase in after tax profit.
For the six months ending December 31st, Lendlease posted a 12% rise in net profit to $394.8 million.
The stronger result was largely based on the 40% increase in earnings for their construction division, with their investment and development divisions posting pretty much unchanged results from last year.
The company announced an interim dividend of 33 cents per share (fully franked), which was slightly higher than the street’s expectation of 30 cents per share.
The company’s return on equity for the last six months reached 13.7%, which is at the upper end of their 10 to 14% target guidance.
Higher Low Pattern Stocks to Add to Your Watchlist
The following group of stocks are in either established uptrends or, in recent months they’ve broken downtrends to begin building the early stages of a bullish “higher low” formation.
Many of these names have been mentioned previously in the blog and/or the monthly strategy video report. It’s worth loading these codes into your watch list and considering rebalancing your portfolio to include allocations towards some, or all of these names:
JHX, LLC, MQG, SHL, TWE, ANN, ANZ, ASX, CCL, CIM, COH, QUB, TAH, WOW & WPL.
With the lower growth names within the above basket, such as WOW & CCL, we compliment the position now with tight covered calls to enhance the yield to 10%+ per annum. With some of the other names, we give a little more breathing space as we expect 5 to 10% price appreciation before selling the call option overlay.
Keeping an Eye on Key Support
Watch LLC, SHL, ASX and AMC as stocks that are trading on support.
Lendlease Group – Higher Low Formation
Most property stocks have broken their long term uptrends and are displaying the early signs of a “rollover” type pattern. We’ll most likely see a bounce from the current oversold level, driven from an outcome on the December Fed rate hike. However, the probability of a bearish lower high in the next 3 to 6 months will mean the counter trend trade from the current lows will be short and explosive but the real opportunity to watch will be the short side trade in 2017.
The above picture applies to most property trusts and property development companies. The exception appears to be SGP and LLC. Out of the two names, my preference remains Lend lease.
FY17 should deliver EBITDA of $1.2b, EPS of $1.30 and DPS of $0.68 placing the stock on a forward yield of 4.9%
Recent Buy Ideas Revisited
Sonic Healthcare (SHL.ASX)
Amcor (AMC.ASX)
James Hardie (JHX.ASX)
Lend Lease (LLC.ASX)
Newcrest (NCM.ASX)
Resmed (RMD.ASX)
For more analysis on our recent buy recommendations and market stratagey, please keep an eye out for tomorrow’s mid-week market update video report. It will be sent out tomorrow morning as a blog post.
Lend Lease FY16 Earnings Result
LLC delivered FY16 NPAT earnings increase up 13% to $700m. The share price has underperformed in the early stages of 2016 reflecting fears of significant apartment defaults which could derail an otherwise strong cash flow profile. The announced FY16 earnings result puts some of these fears at ease and on 11x forward earnings and FY17 EPS growth of 6 – 8%, we see okay value on a relative basis.
FY17 revenue forecast of $15b, EBIT of 1.1b and DPS $0.66, placing the stock on a forward yield of almost 5%.
We own LLC and have left the stock uncovered coming into the earnings result. Our view, (as expressed in the monthly strategy recording), on LLC was the market had become too negative and we are now seeing the re-rating of the stock back to our initial target price of $14.50. With the stock now back at fair value, we’ll look to set the covered call position into the December period.
Level 17 Chifley Tower
2 Chifley Square
Sydney, NSW 2000
1300 614 002
Investor Signals Pty Ltd
ABN 44 143 555 453
Send our ASX Research to your Inbox
Or start a free thirty day trial for our full service, which includes our ASX Research.