St Modwen Properties (SMP) continued to shed retail assets during the first half of 2019, agreeing to sell £18m-worth of non-core commercial properties as it boosted its exposure to residential developments as well as industrial and urban logistics. The latter asset base accounted for 39 per cent of the portfolio by the end of May, up from 33 per cent at the start of the year. Logistics completions – which added 300,000 square feet of space – were focused on small-to-medium sized units.
Demand for housing outside London and the south east also remained robust. Total units sold were up more than a third year on year, although shifting to lower price points meant the average private sales price dipped almost 6 per cent. Still, chief executive Mark Allan says the group remains on track to increase the operating margin by around 0.5 percentage points this year – up from 14.4 per cent in 2018 – through efficiencies of scale and optimising site coverage.
The return on capital employed came in below 7 per cent, a way off management's low double-digit target, although Mr Allan hopes to improve this through more partnerships and by continuing to shrink the existing land bank. On the funding side, at 20.7 per cent loan-to-value ratio remained well below management’s 30 per cent target.
Analysts at Peel Hunt expect an adjusted net asset value (NAV) of 493p a share at the November 2019 year-end, up from 474p at the same point in 2018.
| ST MODWEN PROPERTIES (SMP) | ||||
| ORD PRICE: | 435p | MARKET VALUE: | £967m | |
| TOUCH: | 430.5-435.5p | 12-MONTH HIGH: | 449p | LOW: 358p |
| DIVIDEND YIELD: | 1.7% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 10% | NET DEBT: | 31% | |
| INVESTMENT PROPERTIES: | £1.1bn* | |||
| Half-year to 31 May | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 470 | 25.9 | 9.4 | 3.1 |
| 2019 | 476 | 28.1 | 10.5 | 3.6 |
| % change | +1 | +8 | +12 | +16 |
| Ex-div: | 8 Aug | |||
| Payment: | 4 Sep | |||
| *Includes investments in joint ventures | ||||
