Investors are positive about Lendlease’s restructure, but there will be short-term pain while the process is under way to achieve long-term gain, analysts warn.
Lendlease’s strategy of selling $4.5 billion in offshore assets and cutting staff by a third was welcomed by key investors but analysts say the property behemoth may struggle to build its Australian project pipeline beyond Barangaroo and score enough wins in the globally competitive funds management business.
Lendlease chief executive Tony Lombardo is moving swiftly to simplify the ASX-listed group and bring it back to its Aussie roots, but if his pitch and pace fails to live up to expectations, high-profile dissident investors may be baying for his resignation. Citi analysts said the new strategy should leave Lendlease looking in much better shape with significant value upside. “We estimate potential for the share to re-rate to about $8 per share on successful execution of asset sales. However, the complex nature of closing out of businesses will lead to investors being cautious near term,” the broking firm said.
After the sale of its global assets, Lendlease will focus on fund management and developing big property projects with about 75 per cent of its working capital in Australia. It has a number of major projects under way in Australia, including Melbourne Quarter and Queen Victoria Market and the One Circular Quay towers in Sydney.
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