Lifestyle Communities shares tank on HY result, CEO transition
Make us a preferred source
Make us a preferred source on Google
The news: Shares in Lifestyle Communities slumped even as analysts reacted positively to the property developer's first-half result, released after the market closed on Monday.
The numbers: Lifestyle Communities shares were down 8% to $9.03 at 1:40pm AEDT, taking losses to more than 40% over the last 12 months.
The company reported first-half operating profit after tax of $22.7 million, 9.5% higher than in the prior corresponding period and 8% ahead of market estimates of $21.1 million.
The result was underpinned by better-than-expected new home settlements of 137 during the period, which topped the 120-130 range outlined at its annual general meeting in November.
Monthly net sales rates averaged 9.2 between August and December, picking up to an average of 14 between January and February. However, UBS analysts said this trend would need to keep improving towards 25 net sales per month to support the company's target of 300 settlements in FY26.
The context: Lifestyle Communities executive chair David Blight said the result was achieved after a "challenging period following adverse media coverage in July".
The affordable housing provider faced complaints by 80 residents at one of its projects in northwest Melbourne, accusing it of unethical conduct.
Elsewhere, the company announced the appointment of Henry Ruiz as its new chief executive from 5 March. Ruiz has spent the last 15 years in senior roles at real estate platform REA Group.
He will replace Lifestyle Communities' co-founder and former managing director James Kelly, who retired in December.
Citi analysts, who expected the stock to trade higher after the result, noted that the company plans to reduce debt by selling land holdings, and cut development expenditure by pausing some projects. Its cost structure has also been changed, with likely a likely reduction in costs to follow, they said.
The sources: ASX announcement, UBS research, Citi research
