On Thursday, JPMorgan adjusted its stance on BWP Trust (BWP:AU), upgrading the stock from Underweight to Neutral and increasing the price target to AUD3.60, up from the previous AUD3.50. This revision follows BWP Trust's report of a 2% increase in operating earnings for the first half of the fiscal year 2024, which amounted to $57.5 million, slightly surpassing JPMorgan's forecast of $56.8 million.
The company's dividend per share (DPS) guidance for the second half of the fiscal year 2024 suggests a stable payout compared to the full-year 2023 dividend of 18.29 cents per share. BWP Trust's net tangible assets (NTA) per share were reported at $3.74, showing a minimal decrease, while the average capitalization rate experienced a slight rise to 5.53%.
Operationally, BWP Trust saw like-for-like rental growth of 4.8%, which, despite being robust, was lower than in the previous corresponding period due to decreased inflation. Nevertheless, the Trust received a 4.2% increase from five market rent reviews. A notable development for BWP Trust was the agreed scrip offer for Newmark Property Trust (NPR), which JPMorgan views as a modestly positive move that allows BWP to acquire a struggling entity at an appealing implied capitalization rate of 6.0%.
The Trust's portfolio, mainly leased to Bunnings, is characterized by predominantly infill-located assets, which JPMorgan highlights as quality holdings. Anticipating a positive trend, JPMorgan forecasts a 1%, 2%, and 3% increase in earnings per share over the next three years and projects a return to dividend per share growth in the fiscal year 2025, marking the first rise since the fiscal year 2019.
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