)
SHARES in real estate group McGrath Limited (ASX:MEA) have been placed in a trading halt pending a review of the company's profit performance which has been triggered by a slowdown in the property market.
McGrath has announced it is reviewing its FY16 prospectus forecast in light of current trading conditions.
"The trading halt is requested in order to allow McGrath time to finalise its analysis of information and review by the board," says the company in a statement to the Australian Securities Exchange.
"The trading halt is requested pending an announcement in relation to an update of how McGrath is progressing against the prospectus forecast."
McGrath shares have struggled since listing at $2.10 late last year amid growing concern of a property bubble, particularly in its key Sydney market.
Industry concerns over an oversupply in apartments have been raised in Sydney and more recently Brisbane, lending weight to fears of a price correction.
The company had forecast a gross profit on a statutory basis of $81.4 million for FY16, from total revenue of $125.5 million.
The statutory net profit was expected to be $10.1 million, while on a pro forma basis the company was targeting $18.2 million.
McGrath posted an interim net profit of $400,000 for the December half-year, down 82 per cent from a year earlier.
The result included IPO and acquisition costs of $11 million and was delivered on a 33 per cent lift in revenue to $54.3 million.
When releasing the interim results, CEO John McGrath warned in February that changes to negative gearing laws, a tightening of lending rules by banking regulator APRA and a slowdown from Chinese buyers have created challenges for the sector in the short term.
He said the short-term outlook was weaker than originally anticipated ahead of the company's December IPO.
McGrath shares last traded at $1.30, a steep discount to their issue price.
Last month, John McGrath scooped up 317,000 shares in his company for an average of just over $1.35 a share.
McGrath Limited is expected to lift the trading halt on Tuesday, April 19.
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support
)
)
)
)
)
