BULL POINTS:
■ Cash raised for deals
■ Directors' impressive track record
■ Value to be driven from TAP assets
■ Institutional backers
BEAR POINTS:
■ Execution risk of new deals
■ No dividend
Robert Ware earned his stripes turning around the property giant MEPC in the last property slump, and Conygar, the company he founded in 2003, is now set to capitalise on the weak property market. Until recently Conygar was a cash shell with a small collection of property assets. These included some central London holdings, and a string of marina developments off the Welsh coast which are nearing full planning consent.
However, that has all changed after Conygar's for The Advantage Property Income Trust (TAP) which represented a significant discount on the company's end-July unaudited net asset value of £52.8m. Now delisted and held as a Conygar subsidiary, the company has £154m of UK property assets and bank debt of £103m. Achieved by swapping five shares in TAP for one share in Conygar, Mr Ware describes the process as akin to "a management change". Importantly, it's one that analysts believe could add a further 30p a share to Conygar's net asset value (NAV) over the next 18 months.
| CONYGAR (CIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 118p | MARKET VALUE: | £137m | |
| TOUCH: | 115.75-118p | 12-MONTH HIGH: | 128p | LOW: 89p |
| DIVIDEND YIELD: | nil | DEVELOPMENT PROPERTIES: | £20m | |
| DISCOUNT TO NAV: | see text | NET CASH: | £32m* | |
| Year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 88 | 1.04 | 4.7 | nil |
| 2007 | 162 | 8.17 | 16.9 | nil |
| 2008 | 164 | -0.10 | -0.9 | nil |
| % change | +1 | - | - | - |
Normal market size: 2000 Markets makers: 5 Beta: 0.12 *Correct at 31 March 2009 and prior to acquisition of The Advantage Property Income Trust and excludes proceeds of September's £69m placing | ||||
More share tips and updates...
And the company stepped up a gear last month by at 105p a share to snap up undervalued property assets in a placing that was supported by an array of institutional investors. Conygar now has over £100m of cash on deposit, meaning that its pro-forma net asset value (NAV) is around 140p a share. The board has already looked at £500m of potential deals and is conducting due diligence on two separate deals. Although no deals have yet been announced, Mr Ware's glowing track record in the City means Conygar stands a good chance of working with banks and institutions as they unravel problem property portfolios.
