Having been swept off course for a few years by the financial crisis, industrial landlord Raven Russia is rapidly maturing into an exceptionally profitable business. The shares are up on our tip, and are still worth buying for their combination of high yield and growth potential.
All the logistics warehouses Raven Russia has built around Moscow over the past few years are now let, leaving just a few vacancies near St Petersburg and Novosibirsk. The vacancy rate was 6 per cent on 30 June, down from 17 per cent six months before. Raven also expanded by acquisition in the first half, buying two major warehouses near Moscow. It paid for them by issuing preference shares, but debt levels remain affordable.
The group's annualised net operating income - which won’t feed into shareholders' pockets until next year - is now $167m (£105.51m), up from $129m last December. That growth is already baked into the balance sheet. Thereafter, chief executive Glyn Hirsch intends to develop 50,000-100,000 sq metres a year to sustain growth without overwhelming the market or over-diluting dividends. To that end the group has been buying up zoned land around Moscow and now has enough to build a further 440,000 sq metres.
Broker Singer expects adjusted NAV of 128¢ at year-end (Jun 30: 124¢).
RAVEN RUSSIA (RUS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 64p | MARKET VALUE: | £375m | |
| TOUCH: | 63.5-64.5p | 12-MONTH HIGH: | 68p | LOW: 48p |
| DIVIDEND YIELD: | 5.1% | DEVELOPMENT PROP: | $102m | |
| DISCOUNT TO NAV: | 16% | |||
| INVESTMENT PROP: | $1.41bn | NET DEBT: | 118% | |
| Half-year to Jun 30 | Net asset value (¢) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share* (p) |
|---|---|---|---|---|
| 2011 | 126 | 86.4 | 14.0 | 1.25 |
| 2012 | 120 | 29.6 | 3.5 | 1.50 |
| % change | -5 | -66 | -75 | +20 |
Ex-div: na Payment: na *Including equivalent tender offer buy backs £1 = $1.58 | ||||
