Big Yellow Share Discussion Threads

[digging] 14/8/2008 07:50

DOCTER MARKET ALWAYS KNOWS

[the_doctor] 14/8/2008 07:45

Eh?

• Record quarter for Big Yellow
WHOI, IL - 22 Jul 2008
Big Yellow is boasting its best quarter ever. Caterpillar says its sales and profits are way up from the same period last year

[hedgehog 100] 03/8/2008 17:26

The IC "Sell" article on Selfstore last month contains quite a bit of info. very relevant to BYG -

INVESTORS CHRONICLE, 11 JULY 2008

SAFESTORE (SAFE) SELL

BEAR POINTS:
* Worsening economic indicators
* Fall in housing transactions
* Short-term rental agreements
* UK self-storage yet to face a big downturn

BULL POINTS:
* Rents and values holding up so far
* Long-term trends

SHARE PRICE 143p MARKET VALUE £269m

Extracts from article:
* "Both Safestore and its rival, Big Yellow, are now showing signs that trading is weakening."
* " ... occupancy levels at Big Yellow were down from 82 per cent to 79 per cent in the year to end-March. Safestore has looked the more resiliant of the two ... "
* " ... a slew of bad news makes us think the positive trend will end shortly. The group's customers are split 30 per cent businesses and 70 per cent domestic users. The outlook for both groups looks grim."
* "The glum mood suggests that both businesses and consumers will think twice before taking on the cost of self-storage. Meanwhile, business from people moving house must be threatend by the slump in housing transactions ... "
* "Unlike most other types of commercial property, self-storage leases are short-term, which means that changes in conditions have the potential to show up quickly in property valuations ... "
* "So, despite the arguments put forward by the bulls, our instinct is that self-storage is likely to prove cyclical and the developing consumer downturn could be particularly painful because Safestore's leases are so short-term."

[hedgehog 100] 02/8/2008 18:34

"Stores
... These store openings bring the number now trading in the Group and the Partnership to 48.
... There are a further 22 freehold sites (including five sites within Big Yellow Limited Partnership) and an extension site at Richmond."


Property valuation breakdown at 31 March 2008:
Investment property (i.e. the 48 opened stores) £750.91 million = £15.6 million each
Development property (i.e. the 22 freehold sites) £103.36 million = £4.7 million each

The development property valuation appears to reflect its purchase cost, and as such looks far more reasonable than the investment property valuation.

BYG's valuation of its stores assumes that the addition of a store to a site will on average add over £10 million of value to it, i.e. a more than trebling.

[hedgehog 100] 02/8/2008 17:59

Key BYG business financials for year ended 31 March 2008:
* Revenue £56.9 million
* Adjusted profit before tax £13.3 million
* Adjusted earnings per share 11.2p

Key BYG assets/liabilities for year ended 31 March 2008:
* Property value £854.27 million
* Net debt £282.3 million
* Net assets £580.1 million

Other key BYG fundamentals, 2 August 2008 (share price 324.5p):
* Shares in issue 115,428,399
* Market capitalisation £374.56 million
* Adjusted price earnings ratio 28.97

Extracts from latest BYG finals results, 19 May 2008:
* "Nicholas Vetch, Chairman of Big Yellow commenting on the outlook said: "Trading conditions are likely to remain difficult for some time ...""
* "Since September 2007, 25 of these 39 stores decreased in value, partially due to an increase in exit cap rates and also due to changes of assumptions on operating cash flow performance."
* "This has been a challenging year for the Group, particularly in the second half of the year."
* "The credit crunch, which started in August 2007 has clearly impacted the availability of mortgages to home owners which in turn has caused a significant reduction in housing market activity. This came on top of the additional costs from increasing interest rates over the previous year, and more latterly rising energy, food and transport prices."
* "Approximately 50% of our customers are in some way linked to the housing market, for example with customers renting storage space between house moves or whilst moving within the rental sector."


INVESTORS CHRONICLE, 11 JULY 2008
IC VIEW: "The economic downturn threatens to expose a cyclical side to the UK's fledgling self-storage sector. Although Big Yellow's first quarter results offer some encouragement, high enough at 262p."

The same issue of the IC made Selfstore a "Sell". I would expect IC "Sell" advice on BYG to follow.

Big BYG property value write-downs look very likely to me, based upon worsening business. Because of BYG's net debt, these would have a geared effect upon net assets. E.g. a 30% write-down in property values (£256.28 million) would reduce net assets by 44.18%.

And this is leaving aside the fact that the very basis on which BYG's properties are valued looks very over-generous to me. I.e. a high multiple of net rental income received, considering the high costs (2008: cost of sales £20.792 million on revenue of £56.87 million) which are likely to magnify any fall in rent, and the short-term nature of leases to self-storage customers.

Property is generally only worth what it can be sold for. Because of the fledgling nature of the self-storage sector, there has been little testing of values in the market, leaving far more discretion in setting the valuation rating (i.e. very high). What evidence there is suggests that 'real' values are actually far lower than those claimed.

With the property crash continuing, I believe that net assets could easily halve (to about £290 million), and that BYG could be valued at a 50% discount to those net assets (about £145 million - 126p/share).

And that is assuming that business is not hit too hard, and that the company does not run into debt problems.

[hybrasil] 11/6/2008 12:12

This hasnt really started to fall yet. (Its just dropped below £3). At £1.80 if if goes that low (I will buy) and I certainly see £2 as being on the cards.

[hybrasil] 30/5/2008 09:38

I suspect these values. Have a look at Wichford

[madgooner] 28/5/2008 22:05

haven't looked at this for a while..but really...values up 20% in the year to march...are they serious?

look closely at the basis of valuation imo..

[hybrasil] 28/5/2008 21:50

which reit shares do you like?

[mathisvale] 24/5/2008 10:53

Maybe, but they could well fall further. IMO we need to be able to see an end to the housing market setback before they will start to recover.

However, these shares look good value when the recovery does start. They are on my watch list, along with 3 or 4 of the REIT shares

[mrstock] 23/5/2008 13:35

These prices are way too low - even LOK (Lok n Store) NAV is £2.70 against a share price of £1.68

[vassily] 22/11/2007 01:54

Much better if you have been waiting to purchase.

[bonnard] 21/11/2007 09:31

Much better if you are short

[attilio7] 20/11/2007 08:53

how can £3 be better than £4?

[vassily] 19/11/2007 22:53

Even better.

[vassily] 16/11/2007 23:28

BYG 4 pounds?

[vassily] 23/10/2007 22:34

BYG have also got to pay back the money they borrowed to fund their rapid expansion.

The RoI (% yield) will rise if the share price falls further. Seems likely looking at the chart, but who knows.

[irenekent] 23/10/2007 09:16

The whole thing about BYG and its ilk is security, managed temperature, convenience, insurance. You would be pushed to get insurance for your valued artifacts stored in a garage.

[motoben] 23/10/2007 09:07

i know what you mean about the prices i used to rent a place about the size of a garage as well but they just kept putting the price up so i got a huge shed in the garden built. but whenever i went there it was always so busy with business storage.
anyone know how much the dividend will be this year, i had trouble working it out, i thought it was supposed to be a lot bigger after converting to reit, but it still says yield of around 2%

[smelgy] 22/10/2007 22:52

..........I phoned Big Yellow today to enquire about storage, and quite frankly they are way over the top with prices. £60 per week was quoted, when I can rent a local garage of bigger proportions for £60 per month.

Extortiante I say. Think they might be heading for £4.

[vassily] 22/10/2007 22:31

Yes. Where now?