Transferring Coverage of Narrow-Moat Goodman Group; Our AUD 12 Fair Value Estimate Is Unchanged

We confirm our AUD 12 per share fair value estimate for Goodman Group as we transition coverage to a new analyst. Our narrow moat, medium fair value uncertainty, and Standard stewardship ratings are unchanged. At current prices, the stock is trading 15% above our intrinsic valuation. Our fair value estimate implies fiscal 2019 price/earnings of 24 and enterprise value/adjusted EBITDA of 22. Our valuation is derived using a discounted cash flow methodology, using a 9% cost of equity and a weighted average cost of capital of 8.0%. Goodman’s narrow economic moat is sourced from switching costs and efficient scale benefits.