Dev.Secs. Share Discussion Threads

[jl9] 22/10/2014 19:05

I've done my own research into the relative performance of DSC and I can tell you that nothing speaks to the scale of dog this is.

Now I'm hearing 'dull but safe'. Know this: DSC are unviable across the cycle. That is how safe they are.

spittingbarrel - no, I'm not short.

[scburbs] 22/10/2014 16:44

HE,

They have spent £236.8m on trading properties and they expect to realise £149.1m of development gains in the next 3 years.

By any measure this is an impressive performance at property level and it is clear that DSC are very canny property developers. What is less clear is whether too much of the development gains they are making are being swallowed up in bonuses for the management team and other costs in running the development portfolio.

There was discussion around amending the management incentive plan to focus on NAV growth rather than individual project performance and that needs to get sorted if it hasn't already happened.

The acquisition of Becket House at 5.1% is not really a yield play. DSC made the acquisition the day before the announcement of a major redevelopment around the corner which should add significant value to Becket House's redevelopment potential.

"Phased construction of this highly sustainable development is now due to commence in late summer.

...

Approximately 800,000 sq ft of office space (including the Shell Centre Tower), along with around 80,000 sq ft new retail units, restaurants and cafés, will be accompanied by approximately 800,000 sq ft of residential space incorporating up to 877 new homes, including affordable housing.

The construction, which will continue over an anticipated six-year period, will employ an average of 700 workers on-site rising to approximately 1,630 at the peak of construction."

[citymohawk] 22/10/2014 16:25

HE - The DLN/HLCL numbers look more worrying then DSC I'm afraid. Had they really made a "killing" then the numbers wouldn't be so worrying. With blinkered eyes on the wrong information I can see why you conclude what you do.
You choose the lenses to observe your world and to me your conclusions seem bizarre to say the least.

A person with a pre-disposition and bias will always find the answer they are looking for. This is why I would tell a hypochondriac not to use Google because they'll very quickly report back that they have 2 months to live.

[horndean eagle] 22/10/2014 15:30

Afraid I was being sarcastic. Presentation on website illuminating. Breakdown on profits in development section particularly telling when you marry it up with commentary. Hammersmith came in way ahead of forecasts and yet the results were still desperately poor. Company don't seem keen on stating profits from development. That is the standard measure of reporting. Instead they focus on development gains. This excludes the 15m or so of costs involved in that division. Look at the profit on disposals for the year entry. Less than 1m in the period. Shows how poor and fully valued existing portfolio is given huge strength in market. Massive underperformance against IPD benchmark. You will notice how they totally missed out mentioning IPD at all this time around.

Get the impression that people here think I am being hard on the company. Just go and look at the performance of others in the sector and you will realise how shockingly poor DSC is. From pure property trust players such as SREI, FCPT and PCTN through to reits such as MKLW and MCKS through to developers such as HLCL and SMP. DSC fails on every single count. Lets not even start by comparing them to housebuilders and the eye watering returns the sector is making on both ROCE and Return on assets.

DSC are reactive players in the market. Chasing every bandwagon there is. They are now buying waterloo assets at 5.1% yields when you could have picked the same asset up 3 years ago at 8% yields. They had the cash to do the deal back then as a result of fund raising. The same with Dublin property. They started buying this year when anyone with any common sense would have been piling in 2 years ago. They have an option on Shoreditch property. Hate to say it but DLN and HLCL spotted the opportunity ages ago and have made a killing from it. Just beggars belief how incompetent they are and quite how Marx and his cronies are still in a job is beyond me.

There is a very large discount here and it is fully deserved. Anyone who managed to sell out earlier this year should count their lucky stars they were given the opportunity. Very much undeserved.

[spittingbarrel] 22/10/2014 15:26

JL9 - Are you short?

[ammons] 22/10/2014 13:29

Results are rather boring but nothing life threatening. I am happy to hold and await developments.

[speedsgh] 22/10/2014 11:06

Do we know who appears to be selling at the current levels? It's a bit perplexing in view of the current discount to NAV. We've not had a holdings rns since June which notified of Blackrock going below 11% and Aberdeen Asset Mgmt going above 19%.

[hpcg] 22/10/2014 10:36

Horndean - such is the way with the written word I can't tell if you are being sarcastic or not! I have purchased more at 182 and 186. I'm working on the assumption that 180 is support, even if down trend looks horrible. This is partly because I have a lot of cash slopping around, but also because I did more or less the same thing this time last year and that worked out rather well.

[citymohawk] 22/10/2014 10:12

Just reading it now. I'm marginally happier than I expected to be. If I've understood HE correctly he's changed his mind?

Basically a particular institution has a series of accumulation orders with a 'randomised' variable at a lower price which is why the price is getting hammered during the morning. Whoever it is has already purchased around 300k in the last two weeks. The float is tightening up and I wouldn't be surprised if over 80% is held by next week.

[horndean eagle] 22/10/2014 10:11

From the interview transcript post results today.

Q: Marcus has already attributed the strong performance to your strategy, so
we shouldn't expect any major changes here?
A: No, I don't think so. I think the strategy is vindicating itself. The results that
we've seen for the last six months, and indeed, even the year or two before that, 5
are beginning to show the trends, the last six months definitely strengthening the
vindication for the strategy. Diversification, minimizing specific risk into areas
of the economy where we're seeing strong GDP growth -- very strong GDP
growth, Greater London and the Southeast of England. Acquisition of the
Cathedral Group pushing us further into those exact geographic areas with exact
same products, emphasizing more residential and student accommodations,
those are the aspects of the strategy that reflect themselves in the results and
reflect themselves, I believe, in the guidance that we're giving for the years to
come.
Q: And, Marcus, talk us through the immediate focus for the remainder of the
year.
A: The immediate focus is pretty much more of the same, so it's continuing to
deliver on the business plans for all the individual projects that we have. We
know we've got a certain number we have to realise over the next six, 12, 18, 24
months, and we just continue working those through. So with those elements
where we're seeking planning permission or those where we need to finalise the
asset management plans, it's just delivering on those and delivering on value as
a result.

[elmfield] 22/10/2014 10:04

More empty shops as home base shut stores, tesco in a mess
and yet the market is chased higher!
I know how this story ends.......

[horndean eagle] 22/10/2014 09:54

DSC results presentation on their website. Got it horribly wrong. They are so bullish in their commentary and outlook. FTSE real estate sector trading about 3% off its year high now. Its ridiculous that DSC is trading at year lows.

[jl9] 22/10/2014 09:02

I'm out having averaged down through gritted teeth to no avail.

This is a dull and dangerous stock that should carry a clear wealth warning.

[skyship] 22/10/2014 08:48

scburbs - an excellent detailed post as ever - many thanks for that.

As Elmfield states - more jam tomorrow rather than jam today! Still, with those pipeline development gains to come and the property sector still the only place offering high YIELD returns in the continuing low interest rate environment, the shares offer good value at 190p for the 29.4% NAV discount.

So, will continue to hold.

[scburbs] 22/10/2014 08:19

Mostly fairly dull. EPRA NAV growth of 4.6% before loss on swap slightly on the low side of the 4-6% range or spot on if you swap the - for a .!

The one very interesting aspect is the amendment to the jam tomorrow (or next financial year to be more precise) predictions of trading gains.

In the May presentation it was 2015 £42.1m, 2016 £36m, 2017 £50.7m and 2018 £53.4m.

Now they are 2015 £42.8m, 2016 £50.4m (+40%!), 2017 £53m (+4.5%) and 2018 £61.1m (+14%).

Up 40% in 2016 FY is the big one, but the trend compared to £28.1m in 2013 and £27m in 2014 shows a clear step change.

Other key positive is use of Cathedral to capture more gains on their residential pipeline of over £1bn.

[valhamos] 22/10/2014 08:09

ammons

It is a bit technical but never boring. Finance costs appear in the P&L or income statement; gains and losses in other comprehensive income. So when DSC said it was "finance cost neutral" the implication was that there would be no overall impact on P&L.

[horndean eagle] 22/10/2014 08:06

I apologise for being too bearish on DSC. I got it wrong. Sometimes you just have to put your hands up.

[elmfield] 22/10/2014 07:51

Still a little more of jam tomorrow than today,
though you have to say the discount offers some value.

[ammons] 22/10/2014 07:50

Looks pretty boring to me. Is that the best you can do, Val?

"Exceptional items for the period comprise the costs associated with the acquisition of Cathedral Group of £2.7 million and the termination costs of the cross currency interest rate swap, totalling £7.9 million, relating to the Euro denominated loan notes that we restructured in March 2014. In addition to this exceptional charge, it should be noted that the unwinding of this swap also generated a credit of £7.6 million in Other comprehensive income resulting in the overall impact being broadly neutral to net asset value at 31st August 2014"

[valhamos] 22/10/2014 07:45

Haven't read the whole thing yet but I do not see how DSC can make this statement:

"This has reduced our combined interest, hedging and transaction costs by £0.8 million per annum. The restructure will be finance cost neutral in the year to February 2015... "(and the finance neutral claim was also made in the RNS of 4th April 2014)

when there is a whopping great £7.9m break cost hitting the P&L!

[skinny] 22/10/2014 07:04

Highlights

Financial
· Profit before tax and exceptional items* of £18.0 million (31st August 2013: £8.1 million)
· Basic NAV increased by £15.2 million (4.7 per cent increase) to £335.5 million, equivalent to 269 pence per share (28th February 2014: £320.3 million, 262 pence per share)
· £18.2 million of development and trading gains (31st August 2013: £13.3 million)
· £4.1 million (2.6 per cent) increase in value of investment portfolio (31st August 2013: £1.0 million decrease)
· Interim dividend of 2.4 pence per share declared (31st August 2013: 2.4 pence per share)

Corporate
· Acquisition of Cathedral Group:
o Brings additional expertise to the Group
o Adds 9 new projects to our pipeline
· Strong deal flow since 28th February 2014 to recycle capital into new projects:
o 11 disposals - £127.2 million
o 11 acquisitions - £179.4 million


more..

[citymohawk] 21/10/2014 21:02

Ok so here it is. Which stock would you pick? I welcome answers from everyone. There is no right or wrong answer! Just a bit of fun. You can either choose one stock or all 5 stocks in order of preference. A reason would be great, but not necessary.



Note the metrics:
GROWTH CUR/ASS'T = PERCENTAGE GROWTH IN CURRENT ASSETS
GROWTH TOT/ASS'T = PERCENTAGE GROWTH IN TOTAL ASSETS
GROWTH TOT/LIABI'S= PERCENTAGE GROWTH IN LIABILITIES
NCAV-PS VALUE ADDED = By what value has the Net Current Asset Value Per Share increased/decreased
Y/Y ROE GROWTH = If ROE was 10% last year then by what PERCENTAGE did it increase or decrease this year.