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and another visit to the stock from a few analysts. If ever there was proof we are in a property bubble, it is here: a home on an estate traded for a million dollars. ... Just the building, a manufactured home, on a postage stamp sized block that is not owned but rented from the management of the park. It's at Port Stephens, and is probably waterfront, on the bay, but that is extreme !

James Marlay (Livewire Markets😞 Buy on MNF. Let’s go from tech and fast growth to something which I had no idea was going to see the growth that it has. Retirement living and holiday parks, Ingenia. It seems every second park I drive past these days seems to be an Ingenia Lifestyles community. Simon, is it a buy, hold or a sell?
Simon Conn (Investors Mutual ) Look, it’s a sell for us, James, just on valuation. Simon Owen has built a really good business. He’s done a great job, but like a lot of reopening trades, there’s a lot priced in with this one. When 50 per cent of your profits come from development, that’s not a recurring business of our liking. It’s a one-off profit generator. So on over 25 times, we think it’s pretty full. Whilst it’s obviously going to have a good summer with people holidaying domestically, you’ve got to look at their longer term earnings projection and the development profits that are already baked into that business.
James Marlay (Livewire Markets😞 Roger, the latest result from Ingenia was a 30 per cent profit increase on the prior financial result. A buy, hold or a sell for you?
Roger Montgomery (M.I M.😞 We own it. It’s a hold for us rather than aggressive buy, for the reason that Simon mentioned, just on pricing. Manufactured home estates have been the single top-performing property asset class overseas. In Australia, we’ve seen Stockland enter the market and Mirvac’s going to follow suit.
The market’s been underestimating how long the domestic holiday market’s going to be strong for. We think there’s a massive latent profit pool that sits inside those assets that are leveraged to that theme, which is also being underestimated. There are more caravans being sold in Australia than ever before. And nomads, not grey nomads, just nomads generally, have to take them somewhere to stay. Now our channel checks tell us that caravan parks and national park campgrounds are fully booked until the start of next year’s school year. So, you won’t be able to get a space.
The other thing that’s happening is a residential property boom which means the grey nomads are cashed up. They’ve been selling at record prices and consequently, they’ve been paying record prices for manufactured housing estate homes. In Port Stephens, a manufactured housing estate home was sold for a million dollars. So, it’s a proper sea change event, and it’s already been driving 10 per cent earnings growth. We think if you combine the fast growth with the high prices in Ingenia’s development book, and the fact that they’ve grown their pipeline by 50 per cent in the last couple of years, and they reckon they’re going to grow another 50 per cent over the next 12 months, we think the EPS growth could exceed 10 per cent in the future. So, it’s a good hold for us at the moment.
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