Lok'n Store (LOK) increased occupancy of its self-storage sheds by 8.4 per cent in the first half. Chief executive Andrew Jacobs says he's taking market share away from his larger competitors, Safestore (SAFE) and Big Yellow (BYG), who were forced to charge their customers VAT from 1 October. Lok'nStore always applied VAT, so has benefited from the change.
Given the tax-induced price hikes in the market, it is surprising that Lok'n Store's pricing actually weakened by 1.9 per cent over the period. Mr Jacobs says he deliberately chose to prioritise occupancy gains in the months immediately following the VAT change. He sees greater scope to increase prices now that the spring-summer peak season is approaching. The company's estate was 60.4 per cent let at end-January - a seasonal low point for the sector - up from 55.9 per cent a year before.
The price cuts meant sales growth didn't match the occupancy gains. Yet the company is keeping an impressive rein on operating costs, so the revenue increase pushed cash profits up by 9.2 per cent. This was partly offset at the pre-tax level by higher debt interest costs following the company's refinancing last year.
Development should also provide a boost to future profit growth. Lok'n Store launched a new store in Crawley in November and a further site is scheduled to open in Maidenhead this year.
Broker Panmure Gordon expects full-year EPS of 4.12p, down from 4.46p last year.
LOK'NSTORE GROUP (LOK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 119p | MARKET VALUE: | £31.9m | |
| TOUCH: | 117-121p | 12-MONTH HIGH: | 122p | LOW: 104p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 144p | NET DEBT: | 67% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£'000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 6.41 | 470 | 1.14 | 1.00 |
| 2011 | 6.55 | 771 | 1.96 | 1.67 |
| % change | +2 | +64 | +72 | +67 |
Ex-div: 1 May Payment: 10 Jun | ||||
