article 3 months old

Restructured Aspen Ready To Rock ‘n’ Roll

Small Caps | Jan 18 2017

This story features ASPEN GROUP LIMITED. For more info SHARE ANALYSIS: APZ

Stockbroker Moelis has initiated coverage on Aspen Group with the expectation of strong growth in the years ahead.

By Rudi Filapek-Vandyck

Stockbroker Moelis has initiated coverage on property investment and management company Aspen Group ((APZ)) with a Buy rating and twelve month price target of $1.31, suggesting a total return potential of circa 26% from the present share price.

On Moelis' projections, Aspen is poised to grow profits strongly in the years ahead with the broker's modeling assuming EPS CAGR of circa 30% for the period FY17-19. On the back of this growth, dividend payments are expected to rise from 4.5c per share this year to 7c in FY19.

Aspen Group has been restructuring with Moelis observing the business has emerged with a much simplified format focused on affordable accommodation and with a balance sheet that offers the capacity to make accretive acquisitions, enhance park returns via operational initiatives, and undertake value-add activities including site intensification and brownfield developments.

Characteristics that receive the thumbs up from Moelis include exposure to the ageing population and rising inbound and domestic tourism themes, a capital-light development pipeline plus the opportunity to become a consolidator in a largely fragmented industry.

The company is at present debt-free and, assuming gearing of up to 30%, Moelis estimates there is a capacity to spend $65m on new acquisitions. The company is still leveraged to the resources cycle through the Aspen Karratha Village in the Pilbara, but tourism/holiday and mixed-use parks represent the largest part of the business, with retirement villages in Western Australia and NSW coming in third.

As I write this story, the company's official website is unaccessible.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms