A tight rein on costs and a growing number of storage outlets helped to lift Lok’nStore's (LOK) adjusted pre-tax profits by more than a fifth at the half-year mark – and there is still plenty of room to increase earnings. Overall cash margins are still impressive, with the freehold and leasehold rates coming in at 66.9 per cent and 44.1 per cent, respectively, but while unit occupancy rose by 6 per cent only two-thirds of the overall lettable area is being utilised.
Two new stores were opened during the period at Gillingham in Kent and Hemel Hempstead. A further two sites have been secured in Bedford and Bournemouth, while there is a pipeline of an additional 11 stores. Of these, three will be managed on behalf of the owners. This is especially good business because there is no capital outlay required, and Lok’nStore is paid a fee, which gives an effective cash margin of 100 per cent. Revenue here is still modest, but is expected to grow, and in the six-month period fee income rose 72 per cent to £0.3m. In addition to the set fee, there is also a performance-based fee that should rise as managed sites start to fill.
Analysts at FinnCap are forecasting adjusted pre-tax profits of £4.5m for the year to July 2018 and EPS of 12p (from £4.1m and 10.9p).
| LOK'NSTORE (LOK) | ||||
| ORD PRICE: | 406p | MARKET VALUE: | £119m | |
| TOUCH: | 398-414p | 12-MONTH HIGH: | 485p | LOW: 348p |
| DIVIDEND YIELD: | 2.5% | DEVELOPMENT PROPERTIES: | £15.9m | |
| DISCOUNT TO NAV: | 3% | NET DEBT: | 26% | |
| INVESTMENT PROPERTIES: | £98.8m | |||
| Half-year to 31 Jan | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 387 | 2.1 | 6.9 | 3.00 |
| 2018 | 418 | 2.5 | 6.7 | 3.33 |
| % change | +8 | +21 | -3 | +11 |
| Ex-div: | 3 May | |||
| Payment: | 15 Jun | |||
| *Adjusted net asset value | ||||
