Raven Prop P Discussion Threads

[gfrae] 04/11/2021 16:36

Edison and one other has extensive research publicly available. Kenny, I hope you don't mind but I have posted your repot on the Ordinary chat page too.

[irish_neris] 04/11/2021 10:56

Would anyone know how many analyst's cover Raven for reports. I know someone has linked reports from 1 analyst before.

[gfrae] 03/11/2021 10:44

Thanks Kenny for the interesting and encouraging report.
Though, Russian interest rate rises should have no impact on the P and L, as they say they are fully hedged with interest rate derivatives for at least the next 2.5 years.

[kenny] 03/11/2021 00:12

CBRE has issued, last Friday, a research report for Q3 2021 which you can download and read here:



Below are a few extracts:

"In the Moscow region, weighted average base rent exceeded RUB 5,000 per sq m per
year for the first time ever. Compared to Q2 2021, rates increased by 14% and by 26%
compared to the end of 2020."

"CBRE expects further growth in rental rates, but at a more moderate pace by the end of 2021, the average base rent may reach RUB 5,100 per sq m per year."

"There is a strong shortage of vacant space on the warehouse market. At the end of Q3 2021, the vacancy rate dropped to 0.5% (71,743 sq m) – the lowest in the past decade."
=======================================================================

Amazing to think that warehouse rents have increased by 14% in one quarter and by 26% in the first nine months of 2021 albeit, for context, they have only this year just exceeded 2013/14 levels.

As I think I have mentioned before, large increases in Russian interest rates will hit the P&L immediately, whereas these increases in rents will only accrue to the P&L as current leases come up for renewal over the next 3-4 years. Last reported as 4.1 years being the weighted average term to maturity. However, the major takeaway from developments in 2021 is that the coupon on RAVP is very secure as far into the future as can be predicted - even if rents do not increase further in subsequent years.

[montyhedge] 01/11/2021 15:11

140p normal level.

[cwa1] 01/11/2021 11:41

Nice to see some gentle improvement in the SP

[cc2014] 27/10/2021 11:34

Good to see another couple of pence on the price over the last couple of days.

Still 10% running yield at 120p and I await the next move up after consolidation here.

[gfrae] 26/10/2021 13:33

On another point relative to Russian interest rate costs I note that they are fully hedged, therefore until 2024 Russian rate rise costs will be fully offset by derivative gains.
As mentioned previously with 38% of their debt in Euros which has significantly devalued will also be beneficial.
Raven for a change appears to be the right way in it's assets and in it's liabilities.
The next NAV calculation is likely to be very significantly above 50p.

[gfrae] 26/10/2021 12:33

Very good point Kenny and catsick about the Euro fall vs Rouble which will further increase NAV.

[catsick] 26/10/2021 11:23

A third of the debt is in euros so not only are rates still in the gutter but has weakened a lot vs the rouble add that to the higher rent and highr occupancy and higher valuations and the next set of results will be mind blowing

[kenny] 26/10/2021 10:48

Agreed gfrae and perhaps even higher because the Euro has weakened against Sterling. However, the problem with exchange rates, especially the rouble, is that they can swing all over the place over a few short months.

[gfrae] 26/10/2021 09:23

OK Kenny, using 100.2 at Yesterdays exchange rate the NAV was 53.25p before the release of the accounting provision. Using the exchange rate as of now of 95.6 NAV equals 53.9p plus the 0.5p equals 54.4p
Unless the BofE raises rates I only see NAV going one way.

[kenny] 25/10/2021 15:12

In terms of the exchange rates used for income, the accounts state the following:

"These are the average rates for the six months ended 30 June 2020 and 2021, which are used unless this does not approximate the rates ruling at the dates of the relevant transactions in which case the item of income or expenditure is translated at the transaction date rate."

If we take the Edison methodology, that is 52.55 plus 0.5p for the release of accounting provisions equals 53.05p NAV.

[flyfisher] 25/10/2021 14:39

What about the post b/s provision reversal.

Do they use an average fx rate for the income statement and a period end fx rate for the b/s?

Yes, I see from the accounts that they do use two different fx rates. So i make it 53.5p nav.

Thanks.

[kenny] 25/10/2021 10:32

Thanks, flyfisher.

I have found the quote in question - in Edison’s report of 10.09.20 they did indeed state, “We estimate that a 1% strengthening/(weakening) of the rouble versus sterling compared with our forecast increases/(decreases) net assets by c 1.7%.”

However, I think you have picked up the wrong exchange rate. You have used the average rate at which income was received and booked in the six months to 30.06.21. That rate is irrelevant to the NAV movement since 30.06.21. The exchange rate at the balance sheet date of 30.06.21 was about 100.2 and since that date the strengthening is about 3%.

Using Edison’s methodology gives an increase of 2.55p in NAV since 30.06.21 (50p at 5.1%) whereas my methodology gives 2.8p. I defer to Edison, as mine is a bit rougher and, in any event, the difference is negligible.

[flyfisher] 25/10/2021 09:41

Kenny, My sums.
A recent results rns or brokers note had a fx sensitivity analysis, it commented that a 1% change in fx alters nav by 1.7%.
The fx rate at the last results date was 103.1.
A post b/s R255m provision reversal adds 0.5p to nav.
Current fx rate 96.7.
Current nav 55.9p

[kenny] 25/10/2021 09:26

flyfisher - I would be interested in seeing your calculation of the NAV increase since 30.06.12.

I compute a much smaller increase and here's my calculation, in very rough terms:

RUB has moved from 100 to 97, so a 3% strengthening. NAV at 30.06.21 was £265m so 3% of that is £8m, divided by 566m shares is 1.4p per share.

Because not all debt is in roubles, I appreciate the actual rise caused by rouble appreciation will by more than 1.4p perhaps doubling the increase to 2.8p. Non rouble debt is roughly £255m so 3% of that worked through is roughly 1.4p also, therefore, giving a total increase in NAV of 2.8p.

[flyfisher] 24/10/2021 11:22

Rouble strength increases nav to around 55.9p, which provides a greater comfort margin for prefs holders.

[gfrae] 24/10/2021 08:45

And of course the Rouble has risen, and will probably continue to do so.
Russia has a responsible central bank which will at least try to contain inflation.

[kenny] 22/10/2021 23:59

Pundits are predicting another 0.5% rise in December as the "baseline scenario". That would take the central bank rate from today's 7.5% to 8%. Starting to get a bit scary?! Quite a steep rise from last year's historic low of 4.25% - which seems a lifetime away.

[igbertsponk] 22/10/2021 12:28

Gradually tipping up as fears over the rest of the market getting a tad toppy emerge... Russia s safe haven, and everyone wants their gas!

[garycook] 22/10/2021 10:32

Russia interest rates rise to 7.5%,and possible rate hikes at the next meeting !

[kenny] 22/10/2021 10:32

The Bank of Russia increases the key rate by 75 b.p. to 7.50% p.a.