Daejan Share Discussion Threads

[trytotakeiteasy] 11/6/2017 19:01

retsius - not sure on your sums. I think the FX on US assets will provide about a £0.8 uplift. I.e. £95.81 * 0.834% = £0.8. So without doing anything the group should be worth £96.61 due to FX gains on the US assets.

Of course we have US and UK rental income after costs. I.e. the ongoing rental income profits of the business. I haven't done my sums on this. In the first half they appear to have made a net profit of £16.2m excluding property sales and revaluation gains and derivative fair value gains. I.e. an estimate of ongoing profit. This compares to total equity of £1.56bn. So very roughly they can add 1% in value every six months through net rental income in the business.

£95.81 increased by 1% comes to £96.77. Adding the £0.8 from FX gains on the US assets gives us £97.57.

So if nothing happens to the underlying valuations in the UK and the US we should have an NAV of £97.57 due to FX on the US assets and the value contribution from net rental income.

Suddenly the prospect of eclipsing £100 sometime soon doesn't look so far fetched. Underlying business moves put us only 2.43% below this level.

It is worth nothing that Daejan always seems to sell assets at a premium to book value. This would be another valuation driver if they sell assets in the period to March 2017.

The crux, though, is clearly any valuation changes in the UK and the US. Both remain hard to call.

[retsius] 10/6/2017 21:13

TTTE
Thanks for detailed input.
3.336% of £621 American assets is another £20 m+ increase on exchange gains alone,before any modest US increases in property values.
R.

[trytotakeiteasy] 10/6/2017 20:40

Bit of an FX tailwind for the coming results. Sterling and US Dollar was US$1.2978 at end Sept 2016 and was US$1.2545 at end of March. Works out as a 3.336% boost to the US assets. So assuming they were 25% of the total at September 2016 then this provides only a 0.834% boost to the overall valuation. But better than a kick in the face. If the US assets have valuation gains then we may offset any UK weakness.

FX will probably be a headwind going forward with the current rate at US$1.29 versus US$1.2545 at end of March.

[retsius] 10/6/2017 19:50

TTTE
Yes 2% drop in the pound has added £12 million to the value of American assets straight away.
R.

[trytotakeiteasy] 09/6/2017 23:07

retsius - yes we are off 2.7%. But about a quarter of Daejan's assets are in the United States.
Compared to other stocks this seems harsh. Grainger unchanged. Derwent London up 0.5%. Both are entirely UK driven.

Will have to see if final results settle the ship. Just seems like Daejan is hit by small trades much more than other companies. Now at a 33.7% discount to the September NAV of £95.81. I think it traded at a 50% discount during the financial crisis.

[retsius] 09/6/2017 09:19

TTTE
You'll have woken up this AM. Down £2.65 as I write.
OMG

[trytotakeiteasy] 08/6/2017 14:23

Getting a bit frustrated here. Wake me up in three years time.

[retsius] 08/6/2017 11:16

TTTE
Looking stronger today. Hopefully with the election out of the way, uncertainty will ease (assuming a Tory win !) and the share price will change direction leading up to results.
R.

[trytotakeiteasy] 07/6/2017 13:53

Workspace reported a 3.3% valuation uplift in the year to March 2017. The uplift was driven by the second half with the first half valuation down by 0.9%. So clearly there is hope for Daejan in terms of producing a valuation increase.

Daejan's US assets were 24% of the portfolio at March 2016. But they are more highly leveraged if I recall correctly. This helps insulate from any UK property weakness. Daejan also has assets outside London to insulate it from any weakness in London. Finally the residential exposure helps insulate it from weakness in the office market.

Workspace results do offer hope for further valuation gains at Daejan!!!

[retsius] 07/6/2017 08:21

TTTE
Do I see a blue start?
Trading at over 30% discount to NAV.i was perusing the 'interims ' and noticed the American assets had gone up to £621 m from £490m although the borrowing had increased to fund purchases. I think the net gain was over £20m. Not too shabby.
R.

[trytotakeiteasy] 04/6/2017 20:15

retsius - yes better than a slap in the face. I agree that the fall in UK home prices may have been the driver. You seem to get these very small trades suggesting algorithmic trading. What is notable is that Daejan increased its NAV in the six months to September. We may only need a small increase in the six months to March for sentiment to improve. Rental income should inevitably increase. One month to go before we find out!!!

[retsius] 03/6/2017 11:45

TTTE
Good jump at the close,reassuring somewhat!
R.

[retsius] 01/6/2017 20:24

Looking at the chart it looks as if £64.00 may be a base.
R.

[retsius] 01/6/2017 20:23

Ttte
I think what affected the share price today was the Nationwide survey which recorded a drop in house prices for the third month in a row. Evidently this is this is the first time this has happened since 2009. All house builders were marked down. Disappointing but what about our American assets? Irrational.
R.

[trytotakeiteasy] 01/6/2017 14:19

this is a bit painful. Oh well think of the long-term!!

[retsius] 30/5/2017 19:54

TTTE
Many thanks for input.
R.

[trytotakeiteasy] 30/5/2017 17:21

Retsius - such is the way of things I guess. Now at a 30% discount to the September 2016 NAV of £95.81. I doubt we can stay at a 40% discount for long in a stable or rising NAV environment. Accordingly, there shouldn't be much downside from here provided that the NAV for Daejan is on at least a marginal increasing trend.

The NAV trend going forward is somewhat hard to call given Brexit etc. Daejan issued a surprisingly strong update for the interim results. If they can follow through in the final results then that will be positive. In any event with low leverage we will be able to ride the storm. A month to go to find out with final results in early July.

Share price is off with our slow buyer having disappeared. I should try to build a financial model of the business at some point.

[retsius] 30/5/2017 17:02

Ttte
Disappointing drop over the last two weeks.
Charting wise dropping down with break of upward trend. Uncomfortable to see profit being eroded daily.
Hopefully should see a bounce from this level but if not will have to take some profit.
No change in any trading news and hardly a PI buy or sell all day but that does not matter if the share is starting to head south.
R.

[trytotakeiteasy] 24/5/2017 09:55

Great Portland's results were mixed. Asset value down but they have just paid a special dividend. I don't think the US assets will have a big impact on Daejan.

My NAV guess for year end is £98. Below £98 I am disappointed, above £98 I am happy and above £100 I am over the moon.

[retsius] 23/5/2017 08:16

Just about to post that but you beat me to it!
Yes reassuring figures from Sh. I wonder if American property will have a greater asset increase?
R.

[trytotakeiteasy] 23/5/2017 07:56

Shaftesbury reported a 2% valuation uplift in the six months to March 2017. For Daejan that would take the NAV to £97.7 given a 30% discount to NAV.

[trytotakeiteasy] 22/5/2017 20:39

Grainger are introducing a new strategy to reduce costs and focus on private rental sector assets. It would be interesting to compare the cost base of Daejan to that of Grainger.

Turning back to Daejan and the group had investment property assets of £2bn at March 2016 and in that year generated £68.2m of net rental and related income. I.e. a yield of 3.39%. Taking off the £13m in business admin expenses this falls to 2.76%.

Taking off financial expenses of £12.7m and we are left with about £42.5m. This compares to the £1.12bn market capitalisation. So owner earnings before tax come in at about 3.8% against the current market value. After the 20% tax and we have 3%.

So by my estimate Daejan's ongoing net income (excluding property gains or losses) is about 3% of the current market value. This figure should grow over time with Daejan's total rental and related income up 7% last year.

[retsius] 22/5/2017 19:47

TTTE
Grainger is on my buy/ watch list. Christel Amber Fund has a substantial holding and has been covered by Simon T.
Seems a very impressive business model.
R.

[trytotakeiteasy] 22/5/2017 19:24

retsius - looks like our mystery buyer is done. On well now just have to see what the news is in early July. I haven't run the numbers or done estimates but Grainger's NAV was up 3% in the six months to March 2017 with property valuations up by 2.1%. However, Grainger saw a slowdown in property valuation gains in London with only a 0.7% increase in the period (see slide 21 in presentation below)

www.graingerplc.co.uk/~/media/Files/G/Grainger-Plc/pdf/downloads/half-year-results-presentation-may-2017-v1.pdf

So I don't expect anything too special from Daejan but we should be over £97 NAV per share (£95.81 at September 2016). If we are above £100 then the champagnes on me!!!

[retsius] 22/5/2017 18:25

Dropping 1.4% on 700 odd shares changing hands is one of the drawbacks with this share.
British Land and Land Securities had downgrades to 'hold' which may have spilled over to sentiment with Daejan.
R.