The shockwaves that spread across the real estate sector in the wake of the referendum result had turned into little more than a ripple by the time they reached the coast of Wales so it seems. While many property company shares took a substantial hit, shares in Wales-focused property developer Conygar (CIC) have held up well, and the brief dip caused by the Brexit vote prompted a spate of buying by directors, who picked up nearly a quarter of a million shares at around 133p a share. The move has worked out to be wise and lucrative, as we think the company's strategy of focusing on development projects will also be.
- Shares at big discount to net asset value
- Considerable development potential
- Modest gearing
- Developments funded
- Falling dividend
- Hit from weak Aberdeen market
So what's the allure of a company working well off the beaten track in geographical terms? In Conygar's case, the real attraction is the value locked up in property developments that are currently recorded on its books at cost. The development path has not always been easy. There have been setbacks, albeit with some unintended benefits. For example, a site sold to J Sainsbury in Haverfordwest brought in £13.8m, and when the supermarket decided not to proceed, it sold it back to Conygar for a knockdown price of just £3m. The site already had planning permission for a 95,000 sq ft retail superstore and petrol filling station, and in July the company submitted two planning proposals for 10 retail units, a hotel and a cinema, with consent granted in August. Construction will begin later this year, funded through existing cash resources.