Conygar Investment Share Discussion Threads

[skyship] 09/1/2013 08:07

Jaws - interesting - a property co flotation! Listing expected 5th Feb. Wonder what discount we will see after the first month of trading...

Sleepy - yes, all the stats are based upon the last stated 166p, adjusted upward by the 2p that results from the recent buyback. I of course expect valuations to be marked up once we have final permissions granted on the development projects, esp. Haverfordwest.

[jaws6] 09/1/2013 07:26

skyship
There is news this morning at 7.00 new co coming to mkt called West end of London Prop Invst WELPIC to float in London and some upgrade in property sector today by broker like QED



one thing I did not get is info on MVI note from any broker other then small talk by singer .

[sleepy] 08/1/2013 22:57

Anyone planning to go to the AGM this year?

[sleepy] 08/1/2013 22:57

SKY - I am sure your arithmetic is correct. However I assume it is based on the asset value in the most recent accounts which values development properties at cost. It is interesting that, according to the most recent annual report, it is impractical to have third party valuations of the very substantial development properties. Presumably, were it practical(???), valuations would increase the asset value and the share price threshold for Directors

[skyship] 08/1/2013 18:26

DVI - actually they've got to get the shares above 109p!

Current NAV adjusting for the recent share buyback = 168p x 65% = 109p.

Sharpshare:

# what you posted is correct
# what you posted is history
# what you posted is why the shares are flat on their back @ 90p
# what you posted is why the rest of us are picking up an OPPORTUNITY

Join in why don't you.....

[deepvalueinvestor] 08/1/2013 18:14

That is why the shares are very cheap but if the greedy management want to actually make a profit then they need the share price to be above 103p. Regular share buy backs at a big discount are helping the cause.

[sharpshare] 08/1/2013 12:05

Sharpshare 15 Sep'09 - 16:44 - 44 of 837
Pretty poor show by mgt issuing 60 million odd shares at 105p less costs when the NAV is about 190p. A share buyback would have made more sense for existing shareholders. Massive dilution with new shares more than 100% of current equity. Poor show that many existing shareholders not allowed to take part. I wonder what the motivation behind this massively dilutive deal was. Very poor show...

Sharpshare 15 Sep'09 - 16:47 - 45 of 837
Shareholder wealth created by issuing shares at a big premium to NAV not the other way round.

Sharpshare 16 Sep'09 - 09:02 - 50 of 837
Mgt just destroyed about 45p NAV per share by issuing 137% new shares at huge discount after costs at about 103p per share. Perhaps in a few months time if the share price is 80p they might issue another batch of 137% new equity at say 75p?


If you were a small shareholder in CIC in Sep 2009 and woke up to find that your NAV had plunged due to a massive dilutive share issue (just guess who took up the shares) would you be happy?
Same chaps still in charge.
Mgt have done nicely for themselves.

[deepvalueinvestor] 07/1/2013 23:17

Not surprising you paid up today. Only by going on SETS at 90p would you have done well. As you say, it doesn't really matter paying a bit more when they trade at such a discount.

[jlo10] 07/1/2013 20:15

I bought in today
Hoping for 25% or so
Annoyed by price I paid via TDW (92p) - don't think they picked the lowest on offer
But hopefully won't matter too much

[deepvalueinvestor] 07/1/2013 19:35

Nice price action today with further buying above 90p. I was a bit busy but may add at 90p if I get the chance tomorrow

[deepvalueinvestor] 06/1/2013 19:10

I agree skyShip. I had been hoping for another pullback to 86p but there seems to be no sign of it. Perhaps I can help us move to a new trading range of 90p-95p over the coming weeks!

[skyship] 06/1/2013 18:40

Just posted this on TMF in support of my Annual Tip comp over there:
====================================================================

Many on this thread will recall from just a year ago the opprobrium aimed at the Directors of Conygar Investment Company (CIC), the property company run by Robert Ware, well-known as the former boss of property major MEPC.

CIC took a real hammering in the PR stakes following an absurdly high remuneration and bonus policy. I was one of the many who added their name and pledged their holdings to the action taken by Carmensfella and Roger Lawson's Share Society, to seek a change to the outlandish Remuneration package then in force.

They are putting it right, partly, and relying on the passage of time and underlying performance to regain trust. They are halfway there after this piece in the recent Annual Report:-
=============================================
Review of Remuneration Policy
At the last Annual General Meeting, the Chairman committed to consult with a wide range of shareholders with respect to the Group's remuneration arrangements for Executive Directors. We have also monitored and reviewed the topical debates in this area. It is essential that remuneration remains sufficiently competitive to attract, retain and motivate high quality management to achieve challenging
targets. The Group has been well run and has continued to grow through one of the worst downturns in living memory. However, we acknowledge that bonus payments, in whatever form, should only arise for true out-performance and to that end, we have increased the post-tax hurdle rate on the Profit Sharing Plan to 10% per annum on a cumulative basis. In addition, we have introduced a share price condition. The remuneration committee does not intend to pay out a bonus unless the market share price is at least 65% of audited net asset value per share. We have also made a number of lesser amendments to clarify and simplify the Plan, but in the main, our shareholder consultees were satisfied that the basic structure is appropriate for our business model.
=================================================

I've been watching and waiting for CIC to emerge from its long, self-induced pariah status. It's a bit soon, they may not be there yet, but I certainly feel the Company is now in remission; and at 90p the yawning 46% discount to the 168p NAV may well be even higher due to the undoubted potential of their un-revalued development projects.

There are many reasons why I believe now to be a good buying opportunity:

1. The basic fundamentals of the business are sound; and by any Commercial Real Estate metrics the share price is now significantly undervalued – see the annual Report HIGHLIGHTS below. With the high-yielding portfolio and considerable development potential, the share price might normally be expected to be standing at no more than a 30% NAV discount, ie 117.5p – some 30% higher than the current level

2. The Company's share buyback programme underpins the current share price, is NAV accretive and over time is replacing the selling from more traditional fund management groups with what may be considered more entrepreneurial and active shareholders – the most recent two being Majedie Asset Management (5.5%) and Baker Street Capital Management (6.0%). The Share Buyback Scheme will be renewed at the AGM on 15th January.

3. On the new development side the Company has a development land bank, conservatively held at a cost of £30.8m, with various associated planning processes proceeding well. Short-term progress on any one of the Fishguard, Holyhead or Haverfordwest projects might be expected to have very positive NAV implications. All is fully detailed in the Annual Report and in this link to the Company website



4. The Company has very low gearing for a property company. The current LTV is just 27.4%. There are no funding concerns and the current cost of borrowings is a hedged 4.44%.

5. Technically the shares have traded out of their 2011/12 downtrend and have spent the past 4months consolidating above the 50day & 200day MAs. The way now looks set to challenge the 100p resistance last attempted in Dec'11. A successful break North would provide the impetus to targets around 120p.

6. Finally, there has to be the very real possibility that Robert Ware will retread a path he took many years ago with MEPC, ie an opportunistic MBO. Before any upside kicks in from the development projects, he could be tempted to launch an admittedly cheeky but likely successful offer at a 25% NAV discount. After all, who would turn down a cash offer @ 126p – a full 40% higher than the current offer price of 90p.


Other than the historic corporate governance concerns, the only other negative to an investment here is that regrettably they continue to be rather parsimonious with the dividend, stating "Our dividend policy is unchanged in that we will aim to provide some income return to shareholders but for the most part retain profits for reinvestment in the business." At 90p the 1.25p annual dividend provides a yield of just 1.39%.

To summarise, I believe CIC to be a great Risk/Reward play - perhaps 5% downside versus a quite clear 33% upside to 120p.....& possibly then some! The famous US hedge fund manager Seth Klarman would view CIC as a cigar butt opportunity – ie, time to pick up a valuable commodity being carelessly discarded by others.


=========================================================

A good report following the Prelims in Nov'12:



================================

CIC Annual Report – Y/e 30/09/12:
HIGHLIGHTS
● NAV/share increased by 7% to 165.9p (2011: 155.2p). EPRA NAV/share
increased by 8% to 166.9p (2011: 153.9p)
● Pre-tax profit for the year £7.46 million (2011: £1.76 million)
● Acquired a portfolio of nine freehold and long leasehold properties (the "Edinmore portfolio") for £39.8 million with a net initial yield of 10.6%. Valued at £42.4 million as at 30/09/12
● Obtained planning consents for our £100 million waterfront development at Fishguard, West Wales and our mixed-use marina development at Holyhead, Anglesey, Wales
● Net debt of £48.2 million representing gearing of 31.3% against NAV and 27.4% on LTV
● Strong cash flow and debt capacity for future acquisitions, with total cash and undrawn committed facilities exceeding £50 million
● Share buy back: the Group acquired 9.1% of its ordinary share capital at a weighted average price of 90.8p/share
● Post period end, submitted planning application in respect of the 60,000 square foot Sainsbury's retail food store and 835 residential plots in Haverfordwest

Summary Group Net Assets As At 30/0912:

GBP'm p/share
Investment Properties 176.0 189.6
Development Projects 30.8 33.2
Cash 31.5 33.9
Other Net Liabilities (4.6) (5.0)
------- ----------
233.7 251.7
Bank Loans (79.7) (85.8)
NAV/share: 154.0 165.9
======= ==========
=============================================

Links to the principal assets in the property investment portfolio:







=============================================

[deepvalueinvestor] 22/12/2012 16:34

I can certainly see myself buying more on a bad day. For a 40% or 50% taxpayer an investment that uses income to buy back shares at a large discount to boost nav looks very interesting and tax efficient. What I can really get my head around is the quality of assets. Thoughts anyone?

[hezza123] 18/12/2012 11:30

Berkeley Square Common Investment Fund dropped below 3% yesterday, so could be them.

[badtime] 18/12/2012 11:14

And who let go?

[skyship] 18/12/2012 11:12

So Majedie bought 400k @ 85p. At least one fund manager shares the view that there is value to be found here!

[skyship] 14/12/2012 15:53

And of course, having checked back I remember that placing. A great dollop of equity issued at 105p/share when the NAV was 140p. Even the most hardened of fund managers at that time might think too good an offer to turn down; especially when the Board then started buying-in the stock at up to 120p I recall...

Perhaps RW was trying to win back a few friends!

Never boring this Company.

[skyship] 14/12/2012 15:34

davidosh - perhaps that's why they had to hand the plate round quite so far - not many committing large dollops. Of course some will play; but it is true about the City reaction to the MEPC team; they felt at the time that it was a very low-ball offer made by the insiders. He's good at that - hence the TAP offer.

But as I've stated, it doesn't stop CIC being a very good buy at this level.

[davidosh] 14/12/2012 15:25

Skyship...IF THE City do not like Robert Ware why did 15 institutions pile in to the fundraising in 2009 that brought in all the capital for the board to then lift their hefty bonuses ?

Even more bizarrely why did they buy in to the RW story at £1.05 with the NAV per share at £1.52 only to exit at 86p with the NAV and discount much higher now?

They are the same city institutions that would not back ShareSoc and PIs when trying to sort out the remuneration mess. Now it is sorted but the horse has bolted they choose to run off having lost a fortune. This story is perfect for those looking to show why having your money managed by the City can be less than satisfactory !

[gary1966] 14/12/2012 14:52

Thanks Skyship. Yes it was CIC I was referring to.

[skyship] 14/12/2012 14:40

Gary - assuming you are referring to CIC - there are two reasons:

1. The City doesn't like Robert Ware as he shafted them over the MEPC MBO ten years ago

2. More recently the Board's absurdly generous Remuneration & Bonus package got up everyone's collective nose; just at the time when such excesses were finally being recognised

Most of those who haven't bought here still won't do so in spite of the improved remuneration measures discussed in the recent Prelims statement. A few less sensitive souls however will do so, with their eyes on the likely end game.

Combative hedge funds such as WEISS may not be able to get aboard as in all likelihood the Company will hear first of any large lines headed to market; and will continue their buyback programme. Either way, it is a positive for the share price

The likely end game has to be an MBO as a deal at, say, 125p would be 40% higher than now, but would still mean Ware & associates buying the Company at a 25.6% NAV discount - high enough to make the exercise very profitable.

Of course, earlier successes with the Development Programme would lift all figures.

However you cut it, CIC looks now to be a no-brainer; and a very interesting game to both watch and to play...

[skyship] 14/12/2012 14:23

Gary - CIC or JPEL?

[gary1966] 14/12/2012 14:04

Skyship,

What are your thoughts on why, despite the NAV steadily increasing over the last 3 years, the share price has fallen. A widening discount to a growing NAV is clearly not a sufficient enough catalyst to get the share price moving. Share buybacks look as though they have only had a minor effect. What do you think the catalyst will be to closing that gap and do you think that catalyst will be forthcoming?

TIA

Gary

[skyship] 14/12/2012 13:26

Gary - welcome to JPEL - I'm confident that will be the next profitable PE play for us all. As for CIC, you'll be banking a turn elsewhere hopefully before these start to move better...