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St. Modwen Properties posts increase in full-year net asset value, although real estate investor’s profits fairly flat

Published: 22:37 05 Feb 2019 AEDT

Real estate investing
St Modwen Properties lifted its total dividend for the year by 13.1% to 7.1p a share

St. Modwen Properties PLC (LON:SMP) saw its shares rise on Tuesday as the real estate investor reported an increase in its full-year net asset value (NAV), although its profits were fairly flat.

The FTSE 250-listed group said its full-year NAV increased by 4.3% to 470.4p per share, while profit came in at £60.5mln, up slightly from last year’s £60.1mln outcome.

READ: St Modwen says made good start to 2018 with full-year expectations unchanged though first-half profit slips

The company said its total accounting return was unchanged at 6.0% despite significant de-leveraging, with its see-through loan-to-value (LTV) falling by 7.3 basis points to 16.9%.

St Modwen’s chairman Mark Allan said: "2018 has been another positive year for us. With £529mln of disposals, we made substantial progress on our objective to focus our portfolio on sectors with the best structural growth prospects and reduce our borrowings, whilst we continued to grow housebuilding volumes and industrial and logistics development activity."

He added: "Despite the ongoing uncertainty in the wider UK economy, structural growth drivers in these two key sectors remain positive, so following the significant repositioning over the past 18 months, we are now well placed to deliver a meaningful improvement in our return on capital and earnings in the coming years."

The company lifted its total dividend for the year by 13.1% to 7.1p a share.

Shares higher, but Peel Hunt downgrades

In late morning trading, St Modwen shares were 0.4% higher at 405p.

In a note to clients, analysts at Peel Hunt, however, reduced their target price for St Modwen shares to 400p from 440p and downgraded their rating for the stock to ‘hold’ from ‘buy’.

They said: “Since joining as CE three years ago, Mark Allan has halved the company’s LTV, sold over half the retail assets, sold the large Nine Elms residential site, and shareholders have seen a +36% share price return versus the wider real estate market at +5%.”

The analysts added: “Today’s FY results show further operational progress but a total return of 5% is lower than peers and whilst we see this improving, the shares now trade on a 19% discount – in line with the sector and today we reduce our recommendation to Hold.”

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