Dawnay Day Carpathian Share Discussion Threads

[crawford] 25/8/2008 08:34

jonwig,
good digging...

[kimboy2] 25/8/2008 06:41

I don't think it would have been wise to say that they are in negotiations with whoever, even though they might have been.

It could be that the notice served on Interfruct was designed to speed up the takeover by Lidl rather than allow them to limp along indefintely.

[gunter guil] 24/8/2008 22:08

Good find jonwig. I wonder why ddc chose not to tell us about the potential store hand overs -i suppose because its not yet signed. Once it is, a quick bounce is on the cards.

Lidl expansion in CEE means I am even gettng one out the back of my house.... lucky me!

[kimboy2] 24/8/2008 21:11

The business won't be any good without the shops, might even be a rent increase.

Lidl would be a strong covenant I would say and would increase the valuations.

[jonwig] 24/8/2008 16:13

This might be a bit of reassuring news about Interfruct, where most of the web searches throw up pages in Hungarian. (Does anyone have a decent online translation service for such things?)

2008-08-13
Interfruct storecount melts down

In June, cash and carry food and chemicals chain Interfruct closed eight of its stores, according to Napi Gazdasag. In addition, Interfruct is in talks with German food discounter Lidl, which is expected to take over 10-15 of Interfruct's 23 units.
In the meantime, two stores, a 6,000 m² and a 3,000 m² units in Budapest have already been taken over by Real, and are soon to be re-launched under the new banner.



It's worth noting that DDC's portfolio contains all 23 of the outlets.

Lidl has been expanding in Hungary for some time - this is dated Jan 2005:



A more recent link (May 2008), with Lidl, Aldi and (!)Tesco mentioned in the context of Hungary expansion:



Tesco now has 79 stores in Hungary:



All this suggests to me that we've a buying opportunity here if the price drifts next week (reaction on Friday was a bit muted). Obviously Lidl would be wanting to pick up the Interfruct business for a song and maybe renegotiate terms ... but that would be a reasonable outcome.

[hectorp] 23/8/2008 14:38

jonwig, indeed so. However we should note that while Hungary has been weak , Poland and some of the other territories have been ( are? )stronger. However its very certain that if the West of Europe is recessionary for the next couple of quarters it makes the East's improvement less certain.
Yet again, there is the huge discount to NAV which is clearly on our minds, and can that NAV be relied on. Sales in Hungary at a 'reasonable' level will be very helpful /guide if indeed they come about.
I will add on a personal view the current price could drift further on Tuesday.

[indexwhacker] 23/8/2008 14:25

I'm getting a little tired of the 'buying opportunities' - this is the 6th or 7th in the last 12 months, at ever cheaper levels - particularly if the share price falls are also seen by management as a 'dividend cutting opportunity'. It would be nice to feel a little more optimistic about the chance of an eventual 'selling opportunity'.

IW

[jonwig] 23/8/2008 14:13

But as you said, Hectorp, there is the problem of slowing growth in the region. If Interfruct proves to be a unique event, Kimboy's analysis follows.

The worry is that it won't be.

[lonrho] 23/8/2008 14:12

well maybe this is a double bottom and will be the true bottom.

[hectorp] 23/8/2008 14:02

I agree, and I also agree with your last sentence.

[grahamg8] 23/8/2008 12:10

In a way DDC may be quite happy to see the back of Interfruct. This frees up the development sites, which were identified back at the time the properties were bought, which can now be put up for sale or DDC can do some in house upgrading. Before there would have been either a delay of 15 years to clear the lease or compensation paid to Interfruct for disrupting their business. The other sites can be relet or sold on, or Interfruct can be sold and the leases renegotiated. All in all a nervy few months ahead with a good buying opportunity if you can pick the bottom.

[hectorp] 23/8/2008 10:39

I agree Kimboy, with the one rejoinder that tenants voiding or whatever is possibly symptomatic of weakening economic conditions ( ie in Hungary - though not for example in Poland).
Also there is no need to down-value the portfolio properties, maybe only a few percent, as you also stated.
Lastly, the yield: even with this setback, the next half's dividend is still covered should they decide to pay in full. Possibly it will be sensible for them to take this opportunity to moderate it for the sake of sensibility, ie create the sense of higher fiscal credence - ie, down to 'only' 10%. However the other side of me says 'hey, why should they'? after all, the yield is based on factual income stream and actual rents paid.

[flying pig] 23/8/2008 10:07

Kimboy2
Spot on - may even be a buying opportunity.

[cnx] 23/8/2008 06:25

i found this in yesterdays international herald tribune





Following the repayment trend/results from the loan collectors at IPF may be a better way of judging how our retail tenants (and therefore DDC) are doing rather than following interest rate trends and GDP forecasts which are guesses at best and influenced by too many unknowns

[nickcduk] 22/8/2008 22:14

I would think the dividend for the year may be curtailed sharply following today's news. With the uncertainty around these properties I imagine they will use today's news as an excuse to save cash. NAV will also be impacted by todays news.

[lonrho] 22/8/2008 19:36

aleman

at the last published accounts bank borrowings were less than shareholder funds.assuming all assets realised 25% less than there book values this would give shareholder funds of approx 120m or a third above current market cap,assuming advfn figure above is correct.In practice there would be other adjustments to deferred tax and tax for instance,some redundancy costs etc,but if we can only realise 25% below valuations then the valuers should be shot.I accept that things may get better but they could also get a lot worse with an increase in tenants going bust and subsequent void periods.

ps i read your posts on various threads and on the house thread for instance just scan it for the purple prose.

[hectorp] 22/8/2008 19:10

It was never a 'bubble' sounds like the tech bubble .. never anything like one.

[aleman] 22/8/2008 18:30

Not necessarily. It could be argued impending rate cuts will push those yields down even further, raising NAV to new highs. Remember that so far Poland is still doing very well but will also benefit from the falling rate environment. If UK and Euro rates come down as forecast to 3.5-4.0% in 2009/2010, will DDC yields stay over 6%?

[williebiz] 22/8/2008 18:25

Overstated NAVs at the root of it, bought @ the top of the bubble

[hectorp] 22/8/2008 18:23

yes, and I cacnnot see the Hungarian properies being worth less on resale than a discount of 20-25% to the purchase price - if that.
We are probably worrying too soon. Today's news is certainly annoying, but there is a fair old breathing space .

[williebiz] 22/8/2008 18:21

Rough old world

[aleman] 22/8/2008 18:20

lonrho - the looming cuts in interest rates could improve the outlook no end in a year or two. Bank of America is forecasting UK base rate down to 4.0% next year with possibly more to 3.5% in 2009. Eurozone rates seem to be starting to move as well. DDC shares will look much different if this trend is fulfilled, especially if growth in Poland continues at 5 or 6% as many Poles return home.

You seem to be forgetting that 1/3rd off the sale price leaves nothing with 2/3rds gearing. 25% off would wipe NAV down to about 34p! It will probably better to wait for the rate cuts.

[lonrho] 22/8/2008 18:17

jonwig

true but since we are not as highly geared as some property companies even a 25% discount would give us a significant premium to the current price.

[jonwig] 22/8/2008 17:59

lonrho - yup. (But you won't get full whack!)