Empiric Student Property Share Discussion Threads

[chucko1] 23/8/2018 14:29

Don’t agree. It’s based on uplift of NAV plus dividends. The previous management had only a marginally negative effect on the NAV (they spent a little more cash than they ought to have done).

So share price woes owing to poor margins (now being improved significantly) are not the base level from which she will benefit. That would be far easier to fudge.

Additionally, her interests are certainly aligned with ours. If she achieves 8% per annum total return for 3 years she only gets 25% of this vested, amounting to circa £15k and 100% vested if she achieves 12%. Well, if this happens I would sweep her floor for free. (I would ask for a cup of tea, though).

[clausentum] 23/8/2018 14:07

I don't understand why executives think they are entitled to these nil-cost options as an incentive to do the job for which they are already being well paid!! If she improves things it will only be a reflection of how much the previous management screwed up! Why not charge the cost of the bonus to them.

[stemis] 23/8/2018 12:47

Happy with the results which were slightly better than I expected. They certainly seem to be getting a handle on costs; admin expenses down from £5.8m in H2 17 to £4.9m in H1 18 (reiterated target is £5.0m per half year) and operating margin up from 53% to 62% (reiterated target is 70%) show real progress.

There's a presentation on the web site - hxxps://www.empiric.co.uk/investor-information/company-documents

[chucko1] 23/8/2018 12:30

Good catch. It was updated yesterday. Interesting (though could be chance) that it coincides with a further 1.5p of share price rise over the two trading days. What is certainly the case is that when Numis trashed ESP, on each occasion the share price got trashed similarly.

[skinny] 23/8/2018 12:25

Somewhere along the line Numis have increased their TP.

23 Aug 18 Numis Hold 97.55 98.00 - Reiterates
21 Aug 18 Numis Hold 97.55 91.00 - Reiterates

[chucko1] 21/8/2018 18:25

Has anyone actually seen Numis’s research? I have not. The other two analysts reiterated their own targets of 100p and 105p respectively.

[skinny] 21/8/2018 18:13

Numis doggedly sticking to a TP of 91p.

[stevegrass777] 21/8/2018 17:53

I think this should trade near NAV also,it does seem something was a miss with the outsourcing of facilities management and now they have a handle on the situation.
It always takes a while for the markets to trust management once they loose control of costs but recovery does seem to be well on its way.
I wouldn't worry about the effects of Brexit as I read somewhere that the government was loosening controls on foreign students.

[chucko1] 21/8/2018 16:10

@SpectoAcc, I suppose I am looking at it from the perspective of owning a lot of this one and looking to diversify. In fact, I had a heck of a lot and did not factor in much possibility of the mess that actually occurred. My break even, including trading profits, is about 90p, but there are other good things out there also.

If you do not need to diversify, yes, I would hold on to this as far as the eye can see. I think you will be happy. I will keep a core holding in just that manner, in particular as I think we may see some development gains taken into profit next year.

[spectoacc] 21/8/2018 15:02

@chucko1 - I think they're in a significantly better sector than many prop co's - and previously traded at a decent premium. Not saying they definitely will again, but trading at NAV would seem reasonable if (if) their problems are behind them. 105p now, 109p forecast.

DIGS, who haven't suffered ESP's problems, still trade at a premium.

[chucko1] 21/8/2018 14:47

He’s already up 1p.

But I don’t feel this share has a lot left in it for the time being. It has basically recovered from at least the deep (and partly unwarranted) discount it suffered for several months from December to June. If it gets to 100p, then the 5% yield is nothing special as compared with a bunch of other REITs which have longer leases. Also, we have to see the effect of Brexit on student numbers, although I am not really that concerned with this issue.

In the medium and longer term, it’s not a bad bet to hang on to the 10% total return they continue to target.

[spectoacc] 21/8/2018 11:00

SHARE PURCHASE BY NON-EXECUTIVE CHAIRMAN DESIGNATE

The Board of Empiric Student Property plc (ticker: ESP), the owner and operator of premium student accommodation across the UK, announces that Mark Pain, Non-Executive Chairman of the Group with effect from 1 September 2018, today acquired a total of 100,000 ordinary shares in the Company at a price of 95.5 pence per share

[chucko1] 21/8/2018 10:43

Clausentum, worse than that, reading between the lines over the past 17 months, I suspect that some of the 50/50 ventures or other outsourcing they had been involved with were not run in a manner that was advantageous to shareholders as there were potential conflicts of interest. Note the emphasis on bringing everything in-house (which in certain organisations may not be the best thing to do, but in the case of ESP, I imagine they have been badly afffected by the cost horrors of 2016/7).

I sometimes wonder if that is the reason why Numis are very slow to give the nod of approval to what is going on now - it’s as though they want to see the whites of the eyes of full dividend cover (i.e. absolute proof of good financial management).

On the subject of full dividend cover, it seems clear from reading the H1 statement that they will do everything to achieve this, including pushing back the timing of property sales/development/acquisition, irrespective of maximising the benefit of these operations. Note just one property deal in H1.

They agree with me - boring = good!

[clausentum] 21/8/2018 10:40

I can understand student property companies having a preference for concentrated portfolios in fewer cities to reduce costs. But a major development in any one of those cities could affect the value of ESP's properties. For example,in Exeter the university has just received approval to build 11 tower blocks with 1,182 beds on its own land. There are already so many student developments in Exeter it must be approaching saturation point, which will then affect property value.

[clausentum] 21/8/2018 10:23

"- Administration expenses reduced to GBP4.9 million (H1 2017: GBP7.6 million), on track to meet full-year target of GBP10 million"

I particularly liked this, costs are the one thing that the company should be able to manage! IMO it was the biggest failing of the previous management.

[chucko1] 21/8/2018 08:26

That’s right - management are delivering and this thing is worth more just because of management alone. That was Numis’s beef from the get-go. One day, they’ll raise their share price target.

[paleje] 21/8/2018 08:16

I think Numis has a 109p NAV target for year end, confidence in management must be growing, hard to find good and reliable divis.

[spectoacc] 21/8/2018 07:27

Perfectly happy with those results. NAV above 105p, everything seeming to be heading in the right direction to me.

[daviepj] 17/8/2018 12:50

'progress towards a covered dividend' - at the last dividend, it seemed the percentage that was PID (which I think means covered by income from property business) was quite low (0.20p was PID, 1.05p non PID). Would be good if a higher percentage was a PID divi.

[chucko1] 17/8/2018 12:13

Clausentum, agree totally that the main driver here is costs management which was just thrown to the wind in 2017. There are other drivers, of course, but ...

@SpectoAcc, at least your punctuation of the word “a*sed” is perfect. The students’ might also agree.

[clausentum] 17/8/2018 11:42

I think 5% dividend and 10% discount is fair value. I just want to see costs under control and progress towards a covered dividend. I sold my holding a year ago when my communications with management showed me their reckless attitude towards expansion and costs, but I bought back in after the share price fall and change of management, and I now plan to hold the remainder long term for safe income.

[spectoacc] 17/8/2018 11:34

I too expect a reasonable update - weak £ won't be hurting overseas students recruitment (excuse punctuation, can't be a*sed reaching for Eats, Shoots & Leaves).

[chucko1] 17/8/2018 11:27

14-day RSI at 47.6 now, so in a pretty healthy way the steam has been let out with about a 2p drop from its recent high. Previously, the decline in RSI was achieved by way of a sharp share price drop.

The major damage was done yesterday with a poll or two showing a notable decline in “strong interest to go to university”, as well as a small decline in university applications for entry 2018 (which is a temporary demographic thing, anyway).

The counterbalance is that universities appear to be happy to bribe students via free iPhones and the like, so the pain will be felt by the universities rather than the providers of accommodation.

I hope that Tuesday will be much the same in tone as the recent updates. Boring = good! I expect it to be.

[clausentum] 17/8/2018 10:40

"half year results for the six months ended 30 June 2018, which will be announced on Tuesday, 21 August 2018".

Not long to go!

[chucko1] 17/7/2018 14:08

@Skinny - this is a non-volatile grind higher. Healthy after all that has gone on. That said, you see RSI at 72.13 and I see it at 74.28 on Bloomberg so a pause is probably a healthy thing too! (so I just sold 1.25% of my holding!)