A rocky year ahead, residential outlook weakens

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A rocky year ahead, residential outlook weakens

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Stockland

A rocky year ahead, residential outlook

weakens

Rating Change: UNDERPERFORM | PO: 3.90 AUD | Price: 4.32 AUD

Downgrade to Underperform on weak residential outlook 29 June 2026

We downgrade Stockland (SGP) from Neutral to Underperform driven by a weakening Equity

residential outlook which points to near term downside risk to MPC sales, and medium-

term downside risk to land prices. We cut our PO by 11% to A$3.90 (average of our

Key ChangesSOTP and DCF) driven by a reduction in our near-term settlements and medium-term

price growth. We sit 3-4% below consensus FFO per share for FY27/28 and 300 lots (A$) Previous Current

below FY27 MPC consensus settlement numbers. Inv. Opinion B-2-7 B-3-7

Inv. Rating NEUTRAL UNDERPERFORM

Price Obj. 4.40 3.90Near term sales weakness emerging

We see rising near-term risk to Stockland’s residential volumes, driven by weak 2027E EPS 0.36 0.35

clearance rates, negative house price growth and soft buyer sentiment. Historically, 2028E EPS 0.38 0.37

housing downturns (2010–11, 2017–19, 2022) have taken 9–20 months to recover, and 2026E EBITDA (m) 1,035.9 1,029.4

the current cycle could skew to the longer end given policy-driven weakness in investor 2027E EBITDA (m) 1,058.3 1,024.4

demand. Clearance rates (advanced 6mths) have historically been correlated to SGP net 2028E EBITDA (m) 1,124.3 1,098.4

sales and point to weakness to FY27 sales.

Adam Calvetti >>

De-rating cycle not fully priced ResearchMerrill LynchAnalyst(Australia)

SGP trades on an 11.4x 12m fwd PE with prior weak residential periods suggesting +61 2 9226 5047

adam.calvetti@bofa.com

scope for a further 10-15% of downside. A 10-year view shows earnings multiples are

Donald Chua >>