Safestore Share Discussion Threads

[battlebus2] 16/3/2012 19:17

Not many investors here but as you say very undervalued, looking at 150 by next results. Your still a holder of four too like myself.

[paul_butcher1999] 16/3/2012 18:38

yup, still absurdly undervalued

[battlebus2] 16/3/2012 11:08

Heading for 130 :))

[battlebus2] 09/3/2012 08:52

Well through recent highs :))

[battlebus2] 02/3/2012 16:57

A decent finish to the week just of recent high.

[battlebus2] 21/2/2012 07:48

Revenues still picking up Revenue for Q1 2012 was GBP24.6 million, an increase of 6.7% over Q1 2011(

[battlebus2] 20/2/2012 19:17

Not in the closed period ATM.

[stopaloss] 20/2/2012 14:23

IMS due tomorrow. Director bought 200K on 3rd Feb. I thought it was dodgy dealing for directors to buy within a certain period of news releases?

[battlebus2] 15/2/2012 19:00

Bring on tuesday ,we know the director has bought at 119 so i'm pretty confident.

[paul_butcher1999] 15/2/2012 00:34

yup, this has a long way (up) to go.

[battlebus2] 14/2/2012 08:15

Looking good for the IMS on Tuesday imv.

[battlebus2] 06/2/2012 21:36

Another good day.

[battlebus2] 03/2/2012 17:07

Director buys 200k at 119p very nice :-)))

[battlebus2] 01/2/2012 18:03

Quietly ticking upwards :-))

[battlebus2] 30/1/2012 08:02

Bright opening today.

[battlebus2] 26/1/2012 07:18

Decent set of results with profit up and a 10% increase in divi.

[nellie1973] 27/6/2011 13:01

Broker note today-Buy target 185p

[tricky1992000] 07/3/2011 18:32

Increasing demand for storage solutions could boost this company's growth.

This week, my search for solid companies with a good track record, room to grow, and a reliable and growing dividend yield, has taken me to the FTSE Small Cap Index. Mind you, I wouldn't describe this company as a tiddler, sporting as it does a £274m market capitalisation.

It describes itself as the "UK's largest and Europe's second largest self storage provider," and it goes by the name of Safestore Holdings (LSE: SAFE).

It's a company that does what it says on the tin, and if you want a rapid appreciation of what it can do for individuals and companies, it's a good idea to take the virtual store tour that's available on the company's website (with the sound up!)
In, out

I think you'll agree the website looks very polished, and geared to making sales efficiently. That's what I like to see in companies that make potential investments: it's got the appearance of a business that has been successful, looks to have learnt how to optimise the execution of its operations, and has developed a recognisable and marketable brand.

To my way of thinking, by picking established and apparently hitherto successful enterprises to invest in, I'll have a pretty good chance of minimising the downside. The belt to my braces is that businesses like this one, have just survived the worst recession in a generation.

However, the company's fortunes haven't always been forged in the public arena. For example, in 2003 it delisted from the AIM market, and was the subject of a management buyout. It wasn't until 2007 that it then listed on the main market of the London Stock Exchange at 240p per share.
Shake it all about

During its years in private hands, the company experienced what it describes as "transformation" when it acquired four other businesses and increased its store count from 24 to 99. Today, it operates 118 stores, 22 of which are in and around Paris with the rest in the UK.

To put that into perspective, the business owns around 5.2m square feet of lettable storage space, with around 3m square feet currently occupied.

What I find interesting is the performance of the business since its 2007 appearance on the main market. To iron out the affect of property value fluctuations in its net profit figures, I've concentrated on operating profit that has been adjusted to remove the property element, and cash flow, for an indication of performance in this table:
2007 2008 2009 2010
Revenue (£m) 74 83 84 89
Operating Profit (£m) 41 45 47 48
Net cash from operations (£m) 26 28 25 28
Dividend per share 4.5p 4.65p 4.65p 4.95p
Net cash return on equity 10% 11% 10% 10%

Revenue profits and cash flow have all held up well through the recent economically tough years and the business has returned a reasonable return on equity through that time. This has all translated into a steadily rising dividend.

Having said that, the company appears to be pumping most of its cash into the improvement, maintenance and expansion of its property portfolio and has a pipeline of stores under construction valued at £18m. Also to that end, there is a fair chunk of debt with gearing of about 140% if you include stuff like finance lease commitments, too.
The hokey cokey

It's clear that the business has plenty of capacity for expanding its turnover and in the latest guidance released on 17 February, the CEO said:

"We are confident that Safestore, as market leader, is well placed to take a bigger share of the overall market through our operational expertise, national coverage and scale and is ideally placed to exploit any potential opportunities."

So with economies on an upward improving trend, it's easy to imagine the housing market picking up, for example, with a resulting increase in demand for the services of companies like Safestore.

Meanwhile the latest balance sheet shows net tangible assets of around 144p per share which compares well to the share price of 149p as I write.

In fact, it's tempting to think of the business purely as a property company when the market capitalisation is so well supported by the asset valuation. However, to do so might underestimate the strength of the business model and its potential to deliver greater profits in the event of higher occupancy rates, in my view.

It's useful to compare net cash from operations, which is derived after interest payments, to the market capitalisation. If you do that, the ratio is around 10 suggesting a fair valuation for the operating business. There is also a historic dividend yield of about 3.3% to keep investors company.
Turn around

There is change afoot at Safestore with a new CEO taking charge after the recent retirement of his long serving predecessor. That could unsettle investors, especially since the outgoing boss presided for around nine years and guided the business through its recent growth.

On the other hand, it looks like he has left the company in good shape and my guess is that the business might do well for investors over, say, a five year investment horizon if it can continue to gain market share and fill its spare capacity, perhaps due to rising demand as economies continue to recover.

[cool runnings] 20/1/2011 08:12

Huge overhang cleared at 135p a share!! 33m shares in total

[tricky1992000] 18/1/2011 17:20

motley fool writer on safestore

Storing boxes is a profitable business.

American-style self-storage facilities are a relatively recent arrival to the UK. But for both consumers and businesses, they offer a convenient way of storing possessions and documents, on either a temporary or long-term basis.

From a UK investor's perspective, the market leader is Safestore (LSE: SAFE), which has 118 stores throughout the UK, and 22 stores in and around Paris.

Describing itself as the UK's only national self-storage provider, it serves 41,000 domestic and business customers, employs 500 people, and has 5.2 million sq ft of lettable storage space. What's more, it continues to add new storage outlets, opening three more during 2010 -- two in the UK, and one in France. A further ten stores are reportedly in the pipeline.
Recovery

It's difficult to quibble with the company's annual results for the year ending 31 October 2010, published this morning. The contrast with the recession-hit results of 2009 couldn't be more stark.

* Revenue up 5.7% to £89.2 million.

* Pre-tax profit of £29.2 million, contrasting with a prior year pre-tax loss of £9.4 million.

* Adjusted EPS up 8.9% to 8.19 pence.

* Final dividend increased by 8.3% to 3.25 pence.

* As at 31 October 2010, the property portfolio was valued at £687.2 million, up 6.1% since October 2009.

Additionally, rental rates were at a record £25.55 per square foot, while end-of-year occupancy was also at a record 2.94 million sq ft, up 168,000 sq ft -- and an increase of 195% over the growth experienced in 2009.

Given a fairly flat economy and a stagnant housing market, retiring chief executive Steve Williams seemed pleased, describing 2010 as "a year of considerable progress".
Property portfolio

That said, there's more to Safestore than meets the eye, and any investor will want to take a long hard look at several aspects of the business.

Most notably, Safestore is a property company, albeit one with a difference. So rental yields and occupancy rates come into consideration, in other words, as do property valuations and associated gains and losses. As fellow Fool Owain Bennallack points out, the commercial property sector is attractively unfashionable, but not without its risks and dangers.

That property portfolio valuation of £687 million is reassuring, for instance, but it's only an opinion. Likewise, talk of becoming a tax-efficient dividend-friendly REIT at some future point is just that: talk.

That said, Safestore's portfolio seems fairly solid. Roughly two-thirds of the UK portfolio is either freehold or long leasehold, with UK short leasehold properties ("short" being defined as 25 years or less) having an average remaining lease of just under 13 years. Less than half the French properties are freehold or long leasehold.

The business in France also complicates life -- both from a property valuation and management perspective, as well as exposing the company to currency fluctuations and hedging.

Debt is a factor, as well, although new (and larger) banking facilities have been negotiated until August 2013. Net borrowing (excluding finance leases) at 31 October 2010 stood at £294.0 million, little changed from the previous year, resulting in gearing of 109% -- high, but not ridiculously so.

Finally, although a well-established business, Safestore doesn't have a long stock market history -- at least, not this time round, anyway.

Taken private in a management buyout in 2003 that seemingly left some investors feeling unhappy, the business returned to the market in 2007. Trading above 250 pence at the time, the share price dipped to 40 pence in the depths of the recession, recovering to 135 pence today.
Is it a buy?

Analysts unanimously rate Safestore as a "strong buy". On balance, I think they're right.

The P/E of 11 isn't screamingly cheap, but the growing dividend provides a tasty forecast yield of over 4%. The PEG ratio of 0.2, meanwhile, places the business firmly in 'take a look' territory.

More to the point, while many property companies invest in office space or retail space -- and are thus subject to economic vagaries and the overhang of distressed properties held by the banks -- Safestore ploughs a different furrow: edge-of-town sites rented to people with a lot of cardboard boxes to store.

One for the watch list, I think.

[m.t.glass] 26/4/2010 15:24

thanks scburbs. Is anyone here able to list the rankings of SAFE and its peers? LOK i see is about a twelth of SAFE's size and is fourth biggest.

[scburbs] 26/4/2010 12:45

"The Self-storage Market in the UK

The self-storage market in the UK has grown rapidly over the last decade and continues to offer a great opportunity, particularly to major operators such as Lok'nStore. The 2008 UK Self-Storage Association Industry report prepared by Mintel estimated that the industry had grown by between 8% and 15% annually over the past five years. In its 2009 update Mintel reported that despite the tough economic climate, the industry had grown by around 4% over the past year in terms of available rentable space.

In the UK there are now about 800 primary facilities (not including container self-storage facilities) and around 28 million rentable square feet - an increase of more than one million square feet (4%) of space in the last year. There is 0.5 sq ft of rentable space for each person in the UK. There are over 300 separate companies operating self-storage facilities in the UK with around 45% of the available space in the hands of the larger operators. Lok'nStore is the fourth largest and one of three quoted storage operators in the UK.

The industry in the UK generates revenues of about £360 million per annum and has over 235,000 customers currently storing.

The more mature US market grew from 2.9 sq ft per head of population in 1994 to 7.4 sq ft in 2009 with over 50,000 facilities throughout the US. There are also 1,300 facilities in Australia and New Zealand representing around 1.1 sq ft per member of the population. The lower penetration in the UK contrasts with the difference in population density which is only 32 per sq km in the US against 246 per sq km in the UK. This creates far more pressure to use property resources efficiently in the UK, which is a notable driver of demand for self-storage. Combined with this, the restrictive town planning regime in the UK is a strong barrier to entry in the industry, although in the short to medium term more property will become available to the self-storage industry as competitive uses for sites struggle economically."

[debbiegee] 18/3/2010 13:59

placed all and THERE HAS BEEN NO DILUTION

[debbiegee] 18/3/2010 11:44

should have hit the placing price by now,if fully subscibed should bounce back.