When your company is in the right place at the right time, perhaps you start to worry a little less about stretched valuations. Back in January, we suggested that trading on a 43 per cent premium to forecast net asset value (NAV), shares in Safestore (SAFE) were hardly at an attractive entry point. But after a strong six months trading to April 2018, the shares are now at a 57 per cent premium.
A 49 per cent jump in pre-tax profit included a £51.8m valuation uplift on the portfolio, compared with £30.8m a year earlier, while gross profit was up a more modest 9 per cent at £43.9m.
Even so, demand for self-storage space remained strong, especially in Paris, where the supply of new space in severely constrained. Like-for-like revenue grew by 5.6 per cent in the city, representing the 20th consecutive year of growth, while occupancy grew from 77.3 per cent to 80.4 per cent.
In the UK, revenue was up 4.3 per cent, but this jumped to 10.8 per cent when including a contribution from self-storage group Alligator, acquired in November 2017 for £55.9m. That pushed net debt up from £354m to £423m, although the higher portfolio valuation meant that the loan-to-value ratio was lower at 33 per cent.
Safestore operates from 146 stores, but there is 1.79m sq ft of fully invested but vacant space, representing significant operational gearing.
Analysts at Liberum are forecasting adjusted NAV at the October 2018 year-end of 354.3p a share (from 328.8p in 2017).
| SAFESTORE (SAFE) | ||||
| ORD PRICE: | 556.5p | MARKET VALUE: | £1.17bn | |
| TOUCH: | 556.5-557p | 12-MONTH HIGH: | 581p | LOW: 384p |
| DIVIDEND YIELD: | 2.7% | DEVELOPMENT PROP: | £8.4m | |
| PREMIUM TO NAV: | 66% | NET DEBT: | 60% | |
| INVESTMENT PROP: | £1.12bn | |||
| Half-year to 30 Apr | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 296 | 55.0 | 28.1 | 4.2 |
| 2018 | 335 | 81.9 | 40.3 | 5.1 |
| % change | +13 | +49 | +43 | +21 |
| Ex-div: | 12 Jul | |||
| Payment: | 17 Aug |
