We Upgrade Development Profile and Goodman FVE to AUD 8.90

We’ve upgraded our expectations for the value of logistics facilities Goodman Group develops annually. We’ve also raised the proportion of completed product that is retained by the approximately 10 funds managed by Goodman to 85% from 75%-80%, positively impacting the growth rate in funds under management and associated fee income. We’d previously been forecasting an outer-year economic slowdown triggering a temporary retracement in annual development volumes, with a 10-year annual average for work completed of AUD 3.4 billion. Removing this retracement increases the average annual work completed to AUD 3.9 billion. Following these changes, our fair value estimate increases to AUD 8.90 from AUD 8.30, with narrow moat-rated Goodman screening as undervalued, currently trading around AUD 8.50.