Eureka (ASX:EGH) share price climbs higher on AGM update

The Eureka Group Holdings Ltd (ASX: EGH) share price has climbed higher today following the release of its AGM.

During early afternoon trade, shares in the property asset company are up 1.3% to 38.5 cents.

Let’s take a closer look at what was said in its annual address to shareholders.

Key highlights

During FY20, Eureka completed a number of significant milestones while progressing through its transformation process. This included the acquisition of Liberty Vilas, a 124-unit village in Bundaberg, Queensland, and the disposal of its Terranora units.

Year-end occupancy rates grew to 95% compared to 91% in 2019, and solar energy enhancements were made in 13 villages.

The company reported a net profit after tax of $8.1 million compared to the $6.7 million achieved in 2019.

Underlying earnings before interest tax and depreciation (EBITDA) came to $8.7 million, up 11% on the prior corresponding period.

Net operating cash flow stood at $7.6 million, up 60% although this included a one-off GST refund of $0.6 million.

Net debt jumped to $52 million, however the group’s gearing remained at an acceptable level, with a margin of 37.7%. To allow room for further acquisitions, Eureka expanded its debt facility from $60 million to $77.5 million.

The board pleasingly introduced a dividend reinvestment plan that will commence in 2021.

Outlook for FY21

Due to the continued momentum during the first four months of the 2021 financial year, Eureka updated its FY21 outlook.

Operating results have been encouraging with EBITDA, and net profit after tax is ahead of budget and the prior year. Eureka expects to maintain trading to be consistent with current results.

Forecasted underlying EBITDA for FY21 is estimated to be in the range of $9.8 million and $10.2 million. This excludes asset revaluations, sales at Terranora and any unforeseen expenses.

Implementation of an integrated technology system is a key priority for Eureka as it looks to provide real time reporting and analysis.

In addition, the company will focus on growth in the area of offering accommodation to independent seniors. Eureka noted that not only would this improve cash flows, but also operate its assets on a low risk social infrastructure framework.

Eureka share price summary

The Eureka share price has made a strong turnaround from reaching its 52-week low of 26 cents. Trading at relatively the same levels as the beginning of the year, the company is a whisker away from reaching a multi-year high of 40.5 cents.

Eureka has a current market capitalisation of $89.7 million and a price-to-earning (P/E) ratio of 11.4.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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