Higher rents on flat expenses meant underlying pre-tax profits for A&J Mucklow (MKLW) grew by 7.6 per cent to £13.9m in the year to June 2015. Add in a £42.5m valuation gain, up sharply from £27.7m in the previous year, and you get a 19 per cent increase in the property developer's adjusted net asset value to 427p a share.
That gain pushed the equivalent rental yield on the portfolio down from 7.9 per cent to 7.2 per cent, although this is still well above the heights reached in the last economic cycle.
A shortage of quality industrial space enabled the company to push rents higher, with net rental income up 2.3 per cent at £20.6m. Crucially, average rental levels on new lettings were up 3 per cent from estimated rental values and 11 per cent ahead of when the properties were let previously. At the same time, vacancy rates fell from 6.7 per cent to 5.4 per cent.
Strong investor demand for investment properties means that the company is currently focusing on pre-let developments, completing a 116,000 sq ft unit at Worcester. However, smaller off-market deals secured two investment properties for £4.2m, with a further £2.8m acquisition after the year-end.
Analysts at Stifel are forecasting adjusted net asset value of 438p per share by June 2016.
| A&J MUCKLOW (MKLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 510p | MARKET VALUE: | £323m | |
| TOUCH: | 500-520p | 12-MONTH HIGH: | 510p | LOW: 421p |
| DIVIDEND YIELD: | 4.1% | DEVELOPMENT PROPERTIES: | £6.1m* | |
| PREMIUM TO NAV: | 20% | |||
| INVESTMENT PROP: | £343m | NET DEBT: | 26% | |
| Year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 314 | 12.9 | 22.4 | 18.5 |
| 2012 | 295 | 0.1 | 0.3 | 19.1 |
| 2013 | 303 | 16.3 | 27.2 | 19.64 |
| 2014 | 356 | 40.7 | 66.5 | 20.23 |
| 2015 | 424 | 56.2 | 89.0 | 20.84 |
| % change | +19 | +38 | +34 | +3 |
Ex-div: 3 Dec Payment: 4 Jan *Excludes trading properties of £468,000 | ||||
