Growth Focus: Ingenia Communities Group (INA)

by Patrick Taylor

Date of Data Capture: 1/8/2019


Classification: Residential & Commercial REIT

Current Price: $3.42

Market Capitalisation: $808M

Forecast EBITDA Growth: 19.24%

Yield Estimate: 3.30%

Consensus Price Target: $3.62

# Covering Analysts: 2

Discount at Current Price: 5.85%

Price Target Trend (3-Month): Up-Flat +2.84%

Signal Timeframe: Quarterly-Monthly-Weekly

Trend Bias: Up-Flat / Long-Medium

Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive-Neutral

Recommendation: Buy

Focus: (Dividend Income) & Capital Growth

Set up Notes:
• INA has been moving up within a long-term recovery uptrend and has recently moved out of a 6-year consolidation, with good performance and strong forecasting backing it up we think it should have further to run.
• Strong sales and earnings growth since 2016 has built confidence and a good track record, we see this growth trend extending to 2021 with good analyst sentiment and expectations.
• The major 6-year resistance ceiling at $3 broke earlier this year and has since retested that support level, but now with a move through minor resistance the stock looks to be breaking out in earnest with plenty of targets above it.
Support ($): 3.25, 3.00, 2.75 & 2.50.
Resistance ($): 3.50, 4.00, 5.00 & 6.00.


Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Some investments take time to mature before they become the right stock at the right time, but here we are looking to take advantage of the maturing boomer demographic with aged-care real estate specialist Ingenia Communities Group as the stock shows increasing fundamental strength and a reinvigorated stock price.

Listed on the ASX since 2004, INA develops and manages specialist real estate operations with a focus on aged-care and transitional accommodation. Operating through three separate business arms, the company provides holiday, rental and ownership opportunities to customers in Queensland, New South Wales, Victoria and Western Australia, giving investors good geographical spread and sector diversity.

The company has been experiencing solid organic growth, as well as maintaining an ongoing and active acquisition strategy, last seen with the Eighth Gate purchase, increasing total holdings by 10 communities. This is offset somewhat by an equally active program of non-core asset divestment, helping to lower debt and continue the trend of reducing leverage since 2017.

Ingenia has seen strong and steady growth across sales, margins and profits since 2016, this is forecast to continue out to 2021 and is expected set to accelerate in the medium-term. Yield is a healthy 3.20% and will increase towards 3.5% by 2021, and should be well supported by increasing earnings, with EPS being consistently revised upwards over the last 18 months.

Analyst coverage is thin but positive, with both analysts carrying good sentiment and valuations show a discount to current pricing of almost 6%, but it is also worth noting that these targets have been rising steadily higher over the last two years, another trend we expect to continue.

Pricing shows the company is currently in the midst of breaking above important resistance above $3 after forming a support base throughout much of 2018. With major structural and dynamic resistance breaking mid-2018, and again just three months ago, the stock looks like it is forming a new long-term uptrend, and there are plenty of price targets above current levels.

We see good momentum being signalled here across multiple timeframes and believe the strong combination of attractive technical setup and strong fundamental outlook should provide good support, and with positive price action in confirmation, Ingenia shares look to have a new lease on life.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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