The property boom in London and the south-east is finally starting to percolate out into the provinces and for Conygar (CIC), which has the bulk of its property in Wales, that's great news. Net asset value in the year to September increased by more than 13 per cent to 197.5p as the property developer started to crystallise some of the gains within its portfolio.
- Big development pipeline valued at cost
- Growing interest in regional assets
- Steep discount to forecast book value
- Modest loan-to-value ratio
- Modest dividend payout
- Recent increase in vacancy rates
As well as its rental portfolio, Conygar specialises in bringing land through the planning process and selling off parcels to retailers and housebuilders. And this is where hidden value can be found. Take the 93-acre site at Haverfordwest, for example. It is valued in the books at £17.2m. But in May just under 10 acres were sold to J Sainsbury for £13.75m, which represented more than five times book value. And once highway and infrastructure work is complete, at a cost of £7.8m, Conygar will start to market the residential land, which already has planning consent to build 729 houses.
Another key development that is progressing well is on Holyhead waterfront. Planning consent here has been secured, although an application for a village green could reduce the area for development. But potentially, the mixed-use development is big enough for 326 waterfront apartments and town houses, a 500-berth marina and 50,000 sq ft of retail, leisure and commercial space. All this is valued on the books at less than £10m.
| CONYGAR INVESTMENT COMPANY (CIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 180p | MARKET VALUE: | £154m | |
| TOUCH: | 178-181p | 12-MONTH HIGH: | 184p | LOW: 142p |
| FORWARD DIVIDEND YIELD: | 1.3% | TRADING PROPERTY: | £25.5m | |
| DISCOUNT TO FORWARD NAV: | 20% | |||
| INVESTMENT PROP | £164m** | NET DEBT: | 9% | |
| Year to 30 Sep | Net asset value (p) | Pre-tax profit (£m)* | Earnings per share (p)* | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 167 | 7.9 | 6.1 | 1.3 |
| 2013 | 175 | 7.1 | 6.2 | 1.5 |
| 2014 | 196 | 1.7 | 2.2 | 1.75 |
| 2015* | 211 | 2.1 | 1.9 | 2 |
| 2016* | 226 | 2.6 | 2.4 | 2.3 |
| % change | +7 | +24 | +26 | +15 |
Normal market size: 5,000 Market makers:8 Beta: 0.20 *Liberum forecasts, adjusted NAV, PTP and EPS figures **Includes £6.1m in joint venture | ||||
Also in Holyhead, the company entered a £6m joint venture to develop and operate a nine-acre, 200-space truck-stop facility, which is expected to open next year. This is important because Holyhead is the key embarkation point for lorries travelling to Ireland, and a bespoke facility with sleeping and eating areas is likely to pull in more business. There are also plans to introduce logistics and distribution warehousing facilities on adjacent land, which are not part of the joint venture, and for which planning consent has already been obtained. Book value is just £3m.
Meanwhile at Fishguard waterfront, outline planning consent has been issued for a 450-berth marina, 253 residential apartments and other tourist-related space. This is on the books valued at just over £1m. The total development land bank is currently valued at £37m, but analysts at Liberum reckon there is a potential 44 per cent net asset value (NAV) upside from the development pipeline; equivalent NAV upside of 87p a share.
The contracted rent roll in the year to September fell by £2.2m to £12.2m, but this was mainly due to disposals that fetched £25.7m and made a £1.6m profit. Portfolio vacancies rose from 16.7 per cent to 18.2 per cent, although several negotiations are currently in place, which are expected to reduce this in the coming months.
Group finances remain in good shape. Including £29.3m raised through the issue of 30m zero-dividend preference shares in January, gearing stands at just 9.2 per cent, or 9.9 per cent on a loan-to-value basis.
