Lifestyle: Initiating With an AUD 8.60 Fair Value Estimate and a No-Moat Rating

We initiate coverage on Lifestyle Communities with a fair value estimate of AUD 8.60 per share and a no-moat rating. We forecast revenue to grow at a 10-year compound annual growth rate of 12% and adjusted EBIT margins to approximately double to 22% by fiscal 2034 compared with fiscal 2024 as the earnings mix shifts toward higher-margin rent. We use a weighted cost of capital of 6.4%, reflecting a low cost of equity for the stable earnings in the rental and deferred management fee businesses, which make up the majority of our fair value estimate. We assign an Uncertainty Rating of Medium and a Capital Allocation Rating of Standard. Lifestyle screens as fairly valued.