360 Capital Group (TGP.AX) is a property investment and funds management company. The company actively invests in direct property assets, securities, debt and various corporate real estates in Australia on a private and public equity basis.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]
360 Capital Group has shifted its principal activities recently from investments in traditional properties to debt financing and investments in high-growth real estates. 360 Capital Group expects low growth and disruption in Australia’s traditional real estate market and sold, therefore, a majority of its fund management business and co-investment.
The company is focusing now on the expansion into non-bank lending activities. The increased regulatory pressure, which restraints Australia’s banks from allocating capital in specific property sectors, opens new opportunities for 360 Capital Group. The company foresees non-bank lending activities and mezzanine financing to be the next growth driver. To finance the new operation, 360 Capital Group will launch its first mortgage fund this year. Several Australian banks and brokers showed already interest in a partnership.
Another growth driver for 360 Capital Group could be the focus on real estate assets in high-growth sectors. The company acquired a stake of 67 percent in Asia Pacific Data Centre Group, an organization which leases out data centers. Some legal proceedings are currently going on with the only tenant NEXTDC, a cloud-based data center company, which opposes the new strategic direction of its new landlord.
360 Capital Group was founded in 1997 and is headquartered in Sydney, Australia. The shares are listed on Australia’s stock exchange since 2013. The company’s shares can also be traded in Germany. Major shareholder is the founding director, Mr. Tony Pitt, with an ownership of around 27 percent. 56 percent of the shares are in public hand.
With a workforce of only 15 employees, 360 Capital Group reported revenues from continuing operations of 30m AUD (24m USD) and profits before tax of 86m AUD (69m USD) in 2017. This is a decrease in revenues of 38 percent but an increase in profits 180 percent respectively compared to the same period a year ago. This decrease in revenues is due to the disposal of some of its fund managing activities. In 2016, revenues increased by 24 percent while profits decreased by 4 percent. The operating margin of 84 percent is well above industry average. 360 Capital Group had cash reserves of 97m AUD (78m USD) at the end of June 2017. The company shows a solid balance sheet with good profitability and financial strength. The equity ratio is at 90 percent and the gearing, defined here as total liabilities to total equity, at only 12 percent. The company has basically no debt.
360 Capital Group’s shares are in an uptrend since January 2017 and gained 22 percent in value since. Since December the stock hardly advanced due to the ongoing litigation with its tenant of the newly acquired data centers and the fact that the company is still in the process to realigning its strategy. 360 Capital Group is priced at four times earnings only. The shares trade slightly above book value and at 14 times operating cash flow. The latest dividend yielded almost five percent. Two analysts cover the company and rate it with opposed views as a buy and as a hold.
360 Capital Group comes with a healthy balance sheet and no debts. The company is in the process of adjusting its strategy away from traditional property business to investments in specialty real estates and into non-banking lending activities, two sectors with growth opportunities in the near future. 360 Capital Group has excellent expertise in the property sector. The company recently revised its earnings forecast to 5.5 AUD cents per share, which is an 83 percent increase from the previous estimates. With the current low valuation and the promising strategy, we are optimistic that the share price could increase at least 20 percent this year.
AIS Rating: ★★★★☆
| 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 | |
|---|---|---|---|---|---|
| EPS (AUDcent) | -7.4 | 11.1 | 9.7 | 9.8 | 27.7 |
| Change | n/a | 250% | -13% | 1% | 183% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | LIAB./ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 4 | 38 | 1.1 | 14 | 90% | 33% | 12% | 4.7% |
* Equity / Total Assets, ** Total Liabilities / Equity
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