Ingenia Communities Group (ASX:INA) 1H18 Results


by Jessica Amir

Ingenia Communities Group Limited (ASX:INA) CEO & Managing Director Simon Owen discusses the company’s 1H18 results, new developments and trends.

Jessica Amir: Hi Jessica Amir for the Finance News Network joined by Ingenia Communities Group (ASX:INA) CEO and Managing Director, Simon Owen. Hi Simon, welcome back.

Simon Owen: Hi Jess, it’s great to be here.

Jessica Amir: First up for those investors new to the company, just give us a quick introduction?

Simon Owen: Ingenia Communities Group is one of the largest owners and operators of affordable seniors housing across the country. We provide accommodation to around 5,500 seniors. We were formed out of the shell of the ING Community Living Group back in 2012, and we internalised management back in 2012 and set course as Ingenia Communities Group.

Jessica Amir: Now to the first half 2018 results, a good set of numbers, but just give us some highlights?

Simon Owen: We’re very happy with the way the business is performing at the moment. So looking at revenue that was up 18 per cent to $76.9 million. Our EBIT was up 41 per cent to $19.3 million and our earnings per security were up also, around 18 per cent to 7.1 cents per share. So we’re very happy with the way the business is tracking, but more importantly, there’s great momentum building in the business. And we expect not only to have a very strong second half, but also 2019 shaping up as a great year as well.

Jessica Amir: Now to the portfolio in a little more detail. Just tell us about your lifestyle properties?

Simon Owen: Ingenia owns 33 lifestyle communities across the east coast of Australia. And these are a mix of dedicated lifestyle communities where seniors live, where they basically own the house, but we own the land and charge them weekly rent. And also some of Australia’s greatest holiday and caravan parks like Cairns Coconut, up in tropical north Queensland. So that’s a portfolio that we’ve put together over the last four years and we’re really excited with the way it’s operating.

Jessica Amir: And an update on garden villages?

Simon Owen: We’re the largest owner and operator of seniors’ rental accommodation in Australia. So we own 31 communities across Australia, we’re in all States except for South Australia. That’s a great business; the senior just rents the accommodation off us, so there’s no buy in model. It’s a great business, our strategy in garden villages is really about over time, increasing rents and growing occupancy.

Jessica Amir: Just lastly in the portfolio, an update on lifestyle parks?

Simon Owen: Lifestyle parks, I guess our key focus there has been on growing our development pipeline. So at the moment we have a development pipeline of 2,680 sites. This year we’re on track to develop somewhere between 260 and 280 new homes, and we’re expecting a very strong close to the year.

Jessica Amir: Looking back on 2017, it was a very busy year picking up several large parks. Just tell us about their development?

Simon Owen: Last year we acquired the largest holiday park in Australia, which was Cairns Coconut. That’s a $50 million acquisition, which is the largest single transaction ever done. Since we’ve acquired that park, we’ve been progressively upgrading the park. We’ve put in six new cabins and we’ve really focused on our digital strategy. So I guess really reaching out to the 165,000 people who have registered with Ingenia, and who we can exclusively market to. We’ve also picked up a few other parks, Bonny Hills just south of Port Macquarie on the New South Wales mid north coast, and a couple of rental communities in the Brisbane CBD. So I guess the last six months has been spent busily integrating those, to make sure we capture the best performance we can.

Jessica Amir: A more general question now Simon. What’s the competitive landscape like?

Simon Owen: What we’re seeing over the last couple of years is new entrants coming into the space. So we’ve seen one of the largest groups from the US, called Hometown America have recently entered the market, and that’s certainly putting pressure on pricing. We’ve also seen a Chinese developer start to acquire parks and then some of the traditional buyers, so there’s definitely more competition for parks. I think the way Ingenia has adopted, or evolved our strategy, is we’re now really focusing on finding great blocks of land to build our own communities. As well as optioning or acquiring land adjacent to our existing parks and building out that way.

Jessica Amir: And just lastly, what’s your guidance for the second half of this financial year?

Simon Owen: We expect a really strong close to the second half principally driven by, we’ve got three great projects that are about to come to market, being The Grange community up in Morisset, Conjola down on the New South Wales south coast. And finally, our Latitude One project just north of Newcastle. So we’re expecting a really strong close to the year on the back of those three projects. So we’re very comfortable with the guidance that we’ve given to the market. And we also expect that that’ll position the company very well for a strong first half, next financial year.

Jessica Amir: Simon Owen, thank you so much for the update and congratulations on the results.

Simon Owen: Thanks Jess, it’s been great to be here again.


Jessica Amir

Finance News Network
Jessica is a senior finance journalist and presents bulletins including the Market Outlook, Market at Midday and Market Wrap. She also interviews ASX CEOs and leading fund managers. She joined FNN in January 2017 with over six years of broadcast journalism experience including with Sky News Business, ABC 1, ABC's The Business and ABC24. She’s also worked as a TV reporter for Prime 7 and WIN News. Jessica has worked in financial planning for over six years with leading wealth managers and in real estate.