Lok'n Store (LOK) performed a lot better in the six months to January than the headline figures suggest. The self-storage company saw its adjusted net asset value (NAV) grow by more than a quarter to 387p, debt fall by 35 per cent and adjusted pre-tax profit rise by 13.5 per cent. The drop in the headline number reflected the fact that figures for the previous year were inflated by a one-off £2m payment from the purchaser of the original Reading store in return for relinquishment of all remaining rights over the site.
Demand for self-storage remained strong, reflecting in part the lack of supply of quality space. Four new stores are set to open in 2017, with a further four sites identified. The current pipeline will add nearly a third of extra trading space. Including the current pipeline, this will bring the number of managed stores to 10. Income generated from managed stores is that much less, but there is no capital risk. And whereas cash profit margins on freehold stores are currently 63 per cent, this rises to 100 per cent on managed stores.
The capital investment programme is costing around £10m, and this is being funded through current cash flow and the banking facility. The latter has been extended for an additional two years to January 2023. The reduction in net debt was effected through the sale of 1.98m shares held in treasury.
Analysts at FinnCap are forecasting adjusted NAV at end-July of 404p.
| LOK'N STORE (LOK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 448.5p | MARKET VALUE: | £129m | |
| TOUCH: | 440-457p | 12-MONTH HIGH: | 490p | LOW: 264p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 20 | |
| PREMIUM TO NAV: | 16% | NET DEBT: | 21% | |
| Half-year to 31 Jan | Net asset value (p*) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 307 | 3.8 | 11.5 | 2.7 |
| 2017 | 387 | 2.1 | 6.9 | 3 |
| % change | +26 | -45 | -40 | +12 |
Ex-div: 11 May Payment: 9 Jun *Adjusted NAV | ||||
