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Safestore secures greater profits

Safestore posts another set of stonking results as the self-storage boom continues
June 21, 2022
  • Key metrics all on the rise
  • Business expands in Paris

It is hard to fault Safestore’s (SAFE) performance in its half-year results. Like its competitors Big Yellow Group (BYG) and Lok’n Store (LOK), the self-storage company thrives in a countercyclical, tumultuous environment. Births, deaths, relocations and lifestyle changes of all shades are what drive the demand for space to stash things. With both the UK and the wider world seemingly careening from one crisis to the next, business at Safestore is going strong.

Its surge in profit has primarily been driven by a £224mn increase in the value of its property portfolio, but revenue is also up 15 per cent. Meanwhile, its expansion into Europe is also paying dividends. Occupancy and revenue in its Paris sites are both ticking up. This would explain why the company opted to acquire three sites in the city where it plans to build another 134,000 sq ft of self-storage space.

The real question is not whether Safestore is doing well – it most certainly is – rather the question is: what represents a fair value for this company? That one is harder to answer. In January, after posting its results for the year to 31 October, the shares were trading at a dizzying 208 per cent premium to net asset value (NAV). Even for a company which had doubled its pre-tax profit from £198mn to £405mn, that seemed quite steep. Shareholders evidently agreed which is perhaps why the company is now trading at a much more sensible 38 per cent premium to NAV. For a company of this quality, those shares are unlikely to get much cheaper any time soon. Buy.

Last IC View: Buy, 1320p, 13 Jan 2022

SAFESTORE (SAFE)   
ORD PRICE:1,052pMARKET VALUE:£2,218mn
TOUCH:1,050-1,053p12-MONTH HIGH:1460pLOW: 933p
DIVIDEND YIELD:2.6%TRADING PROP:N/A
PREMIUM TO NAV:37.9%NET DEBT:-41%
INVESTMENT PROP:£2.41bn   
Half-year to 31 AprNet asset value (p)*Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
202155416775.17.50
20227632851289.40
% change+38+70+71+25
Ex-div: 07 Jul   
Payment: 11 Aug