Safestore is doing a good job of wringing growth out of its self-storage warehouses, and not getting enough credit from the market. Revenue for the year to end-October increased 6.6 per cent, thanks both to more space being let and to higher average rates – Safestore isn't simply buying in custom with cheaper prices.
That said, profits took a hit from exceptional items and a 10.7 per cent hike in underlying administrative expenses – so cash profits only grew 2.7 per cent. New chief executive Peter Gowers has been investing in marketing and 'yield management' – the kind of dynamic pricing models common in the airline and hotel industries (Mr Gowers used to work at InterContinental Hotels).
Safestore also knows its customers better than it used to, says Mr Gowers. Investors used to assume the self-storage sector was linked to the housing market, but Mr Gowers has uncovered a wider range of drivers. These include the rental market; family upheaval following marriage, divorce or death; the shift of retail business away from the high street and on to the internet, and a trend among big companies like British Gas and Diageo towards reducing their permanent property portfolios and renting self-storage units when needed.
Broker Peel Hunt expects adjusted 2012 EPS of 9.1p (2011: 8.6p) and a 5.7p dividend.
SAFESTORE HOLDINGS (SAFE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 106p | MARKET VALUE: | £199m | |
| TOUCH: | 105-106p | 12M HIGH / LOW | 157p | 92p |
| DIVIDEND YIELD: | 5.0% | DEVELOPMENT PROPS: | £15.1m | |
| DISCOUNT TO NAV: | 28% | |||
| INVEST PROPERTIES: | £714m | NET DEBT: | 140% | |
| Year to 31 Oct | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 133 | 104 | 43.0 | 4.50 |
| 2008 | 137 | 14.9 | 6.70 | 4.65 |
| 2009 | 133 | -9.42 | -0.14 | 4.65 |
| 2010 | 144 | 29.2 | 14.1 | 4.95 |
| 2011 | 147 | 8.55 | 6.95 | 5.30 |
| % change | +2 | -71 | -51 | +7 |
Ex-div: 14 Mar Payment: 11 Apr | ||||
