Sutton Harbour in Plymouth has a long and chequered history and was once owned by the London & South Western Railway. The railway is long gone (although some of the tracks are still there) and since 1989 the harbour - now with a lock gate - has been owned by Sutton Harbour Holdings (SUH), and the dock has been transformed into a 573-berth boating marina.
- Shares trade far below net asset value
- Fish market performing well
- New marina planned
- Impressive real estate portfolio
- No dividend
- More losses on the airport venture
But it hasn't been plain sailing. In 2000 Sutton Harbour bought the lease on Plymouth City Airport and set up its own regional airline. This flopped and was shut in 2011; meanwhile, Sutton was left nursing a large loss.
However, that's water under the bridge and, with a new chief executive at the helm, the company is concentrating on its core business, which includes redeveloping the dockside area, expanding the marina and operating a fish market. The real value has yet to be realised, which is why the share price languishes so far below book value of 43p per share. But there is plenty of development potential and earlier this year a deal was secured to develop a new marina at nearby Millbay. This will cost around £4m, but the funds have been secured though a share placing that raised £5.7m earlier this year, and work is expected to start on the 171-berth facility in time for use next summer.
The existing marina in Sutton Harbour is performing well, with occupancy rates of around 90 per cent. This is about right because it is useful to have some availability for passing trade and special events. Moreover, mooring fees are around half the level charged at Southampton.
| SUTTON HARBOUR (SUH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 30p | MARKET VALUE: | £29m | |
| TOUCH: | 27-30p | 12-MONTH HIGH: | 30p | LOW: 18p |
| DIVIDEND YIELD: | nil | PE RATIO: | 50 | |
| NET ASSET VALUE: | 43p | NET DEBT: | 38% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 29.3 | -3.45 | -4.86 | 2.26 |
| 2010 | 39.3 | 2.52 | 3.64 | 1.81 |
| 2011 | 9.64 | 2.51 | 4.30 | nil |
| 2012 | 9.90 | 0.46 | 0.96 | nil |
| 2013* | 8.70 | 0.70 | 0.60 | nil |
| % change | -12 | – | – | – |
Normal market size: 1,000 Market makers: 4 Beta: 0.1 *Arden Partners estimates, profits and earnings per share are not directly comparable | ||||
When the port was developed into a marina by installing a lock, the fish market was relocated and has developed into the number two fish market in England. Last year it handled 5,400 tonnes of fish, double the amount landed in 2009. Sutton Harbour generates revenue from the facilities that it provides, which includes its own auction house, and it takes a percentage of the value of fish landed.
The group also has a property portfolio of buildings around the harbour, where void rates are less than 10 per cent, and two car parks with 426 spaces. Indeed, the total estate portfolio is valued at about £50m. That feeds through to net assets for shareholders of £42m, which compares with a £29m market value of the equity.
Even the airline venture has a silver lining. True, after 2010-11's £9m loss, it lost another £1.6m in the latest year. But Sutton Harbour still owns a 142-year lease on the 113 acres of land. Assuming this is redeveloped into the usual mix of housing, commercial buildings and shops, the company benefits from 25 per cent of the development profits, which could be as much as £10m.
