In some respects, it is not hard to see why the market has attached such a large premium to Big Yellow's (BYG) shares. The onset of lockdown measures may have marginally reduced closing occupancy levels but a 2.7 per cent increase in the average net rent charged per square foot (sq ft) boosted revenue during the year to March. Occupancy had risen to 82 per cent by the start of June and the average net rent per sq ft since April was also 1.4 per cent higher.
However, a potential downturn in housing transactions could drag on occupancy levels this year, indicated by the reduction in demand from short-stay domestic customers as the market was frozen at the end of March. Nevertheless the group is pressing ahead with developments, after acquiring four sites last year, taking the total pipeline to 13 stores. That has a cost to complete of £159m, taking into account the £64m already deployed this year. An April share placing boosted available liquidity to £162m and the self-storage group posted an operating cash conversion rate of 92 per cent last year.
Panmure Gordon forecasts adjusted NAV of 814p at the end of March 2021, rising to 852p the same time the following year.
|BIG YELLOW GROUP (BYG)|
|ORD PRICE:||1,045p||MARKET VALUE:||£ 1.83bn|
|TOUCH:||1,043-1,048p||12-MONTH HIGH:||1,245p||LOW: 630p|
|DIVIDEND YIELD:||3.2%||DEVELOPMENT STOCK:||£136m|
|PREMIUM TO NAV:||49%|
|INVESTMENT PROP:||£1.39bn||NET DEBT:||31%*|
|Year to 31 Mar||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|*Includes lease liabilities of £17.2m|