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McGrath shares tumbled out of a trading halt today, plunging as much as 34 per cent in early trade to a low of 86c per share,leaves the shares around less than half of the $2.10 initial offer price the company was floated with in December.
the drying up of listings volumes, sales and a continued reduction in “Chinese buyer activity” pushed the company to downgrade its earnings expectations to between $26m and $27m, down from its prior pro-forma target of $31m.
CMC Markets chief analyst Ric Spooner said McGrath’s profit warning was early evidence of a broader property downturn.
“McGrath’s reduced profit guidance provides another warning that real estate and construction is setting up to become a headwind for Australian economic growth for a while,” Mr Spooner said.
“Reduced listings in North and North West Sydney combined with softer Chinese demand are likely to flow through to lower construction growth.”
Investors have been rushing out of the McGrath stock following concerns about the health of the local property market, after signs of reversing price growth across key housing markets.
Recent housing data shows auction clearance rates and new home sales have fallen sharply, particularly in Sydney, which is coming off a boom. |
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