First-half results from St Modwen Properties (SMP) look alarming at first glance, but the underlying picture provides room for optimism. Headline profits were distorted by a string of one-off factors, including a 10 per cent writedown in the value of the New Covent Garden Market site, while the previous year's numbers were boosted by the inclusion for the first time on the balance sheet of this 10-acre site at Nine Elms.
The underlying fundamentals paint a brighter picture. Adjusted net asset value (NAV) edged ahead to 451p a share, while net rental income jumped by 39 per cent to £21.8m. While much has been made of the Nine Elms site and the post-referendum uncertainty, it's important to remember that this comprises just 12 per cent of the portfolio. St Modwen is sitting on a 6,000 acre land bank, with regional assets making up three-quarters of the portfolio. Business outside Nine Elms is progressing well. A 257,000 sq ft industrial estate in Bury is adding £1.1m in annualised rental income, while Kirkby Town Centre in Merseyside has been leased to 80 tenants, generating rental income of £3.3m.
Analysts at Peel Hunt expect to downgrade full-year NAV estimates from 477p to 460p per share, implying no growth in the second half.
| ST MODWEN PROPERTIES (SMP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 238.8p | MARKET VALUE: | £530m | |
| TOUCH: | 235.5-238.8p | 12-MONTH HIGH: | 499p | LOW: 228p |
| DIVIDEND YIELD: | 2.4% | DEVELOPMENT PROP: | £186m | |
| DISCOUNT TO NAV: | 43% | |||
| INVESTMENT PROP: | £1.3bn* | NET DEBT: | 54%: | |
| Half-year to31 May | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 394 | 180 | 76.0 | 1.9 |
| 2016 | 421 | 36 | 11.8 | 1.94 |
| % change | +7 | -80 | -84 | +2 |
Ex-div: 11 Aug Payment: 5 Sep *Includes joint ventures | ||||
