Two key developments during the first half were the proposed imposition of VAT next October on self storage. Lok'nStore already pays VAT but its competitors do not. The group's project partner, Lidl, also secured planning consent for a new self-storage facility near Maidenhead, with potential footfall likely to be boosted by the inclusion of a new Lidl supermarket on the site.
Lok'nStore's average prices fell 1.2 per cent to £18.51 per sq ft during the half, but, as these are well below UK average prices of £21.97, the group has plenty of scope to increase prices, especially as its competitors are likely to as well. Occupancy rates were a shade lower at 55.9 per cent but operating margins rose from 45.9 per cent to 46.2 per cent.
Panmure Gordon is forecasting full-year pre-tax profits of £1.2m and EPS of 4.8p (EPS of 3.57p in 2010).
|ORD PRICE:||105p||MARKET VALUE:||£26m|
|TOUCH:||104-105p||12-MONTH HIGH:||122p||LOW: 93p|
|DIVIDEND YIELD:||1.0%||TRADING STOCK:||nil|
|DISCOUNT TO NAV:||32%|
|INVESTMENT PROPERTIES:||£69m||NET DEBT:||66%|
|Half year to 31 Jan||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 2 May
Payment: 11 Jun
Lok'nStore has several site openings in the pipeline, and is also seeing an improved contribution from its Saracen document storage business. Add in a progressive dividend policy, and the shares, trading at a hefty discount to net asset value, still look cheap. Buy.
Last IC view: Buy, 98p, 11 Nov 2011