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St Modwen sees NAV boost

Record profits and a big lift in net asset value, but St Modwen shares still look cheap
February 2, 2016

"Demand is still out there in bucket loads," insisted St Modwen Properties (SMP) chief executive Bill Oliver, who retires in November. Small wonder then that the property developer delivered record profits in the reported period.

IC TIP: Buy at 390.6p

Figures were boosted by the inclusion for the first time on the balance sheet of the 10-acre Nine Elms Square site, which includes the New Covent Garden Market. Work on building a new market is already under way, and the group is currently exploring its options on whether to sell the remaining area when it becomes vacant early next year, or to develop itself or through a joint venture. Inclusion of the site lifted net asset value by £127m.

Net rental income grew by 5 per cent to £32.8m, and will be further boosted by phase 3 of the Bay Campus at Swansea University, which comes onstream next September, and rent from phase 2 of the Longbridge redevelopment, which opened last November.

Of the 6,000 acre land bank, around one third is earmarked for residential developments, and the group's own housebuilding operation, St Modwen Homes, lifted profits by 50 per cent to £12m. The portfolio grew to over 32,000 plots, of which 80 per cent has planning consent or allocations within local plans.

Analysts at Numis are forecasting adjusted NAV at November 2016 of 446p, from 342p in 2015.

 

ST MODWEN PROPERTIES (SMP)
ORD PRICE:390.6pMARKET VALUE:£867m
TOUCH:389.8-390.6p12-MONTH HIGH:499pLOW: 358p
DIVIDEND YIELD:1.5%DEVELOPMENT PROPERTIES:£184m
DISCOUNT TO NAV:6% 
INVESTMENT PROP:£1.08bnNET DEBT:54%

Year to 30 NovNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20112325021.73.3
20122514721.33.6
20132798133.54.0
201432513253.84.6
201541423597.95.75
% change+27+78+82+25

Ex-div: 3 Mar

Payment: 1 Apr