Sdic Power Discussion Threads

[kibes] 21/5/2010 08:51

Just had a look at Gagfah but I don't like the look of the chart:

a) Its going down
b) Support appears to be at 2 if the current 5 ish level fails

The stock market is very high risk at the moment in my opinion, concerns about excessive and unpayable government debts are at last coming home to roost and we could be headed towards a double bottom for the FTSE at 3500 or worse. Couple that with the latest high speed trading computer gimmickry and we could see a total collapse of the markets within seconds as almost happened a week ago in the US.

Cash, although theoretically worthless, is king for the time being. What to do??


free stock charts from www.advfn.com

[envirovision] 20/5/2010 18:09

have included a yahoo link with price and estimates etc

[envirovision] 20/5/2010 18:08

OK have made a thread at



or just search for GFJ

not sure how to display a live chart though for it

[scburbs] 20/5/2010 16:17

A Gagfah board would be a good idea Envirovision (divi yield in the header would be eye catching). Do you fancy hosting?

[envirovision] 20/5/2010 15:56

Yes thats a good idea scburbs. I have quite a holding of Gagfah. Perhaps we could start a new board for Gagfah, or would it be best to change this board to Gagfah?

[scburbs] 20/5/2010 15:30

Market volatility is increasing. Government bonds yields (PIGS aside) are falling as part of a flight to safety. German residential property is uniquely well placed to perform robustly in this sort of environment, particularly with the Euro falls bolstering the German economy.

I am switching some more of my long exposure into German resi (Gagfah, not SDIC due to lack of confidence in the board and managements team ability to take the hard decisions for the benefit of shareholders).

[scburbs] 19/5/2010 09:21

Colonia results also out. Vacancy improvement was a more muted 13.6% to 13%, but Colonia had the good sense to make significant disposals last year and have significantly cut costs. Colonia in line with every single other competitor has a much lower cost base than SDIC and in line with all of the others is profitable and cash generative.

[scburbs] 19/5/2010 08:47

TAG Q1 release. Continuing to perform strongly and have now turned a vacancy rate even worse than SDIC into a much more respectable 8.1% (previously 16.4%) and falling sharply [2.2% in last 3 months]. Quite a remarkable turnaround since the management change less than a year ago. This shows what can be done.

"Furthermore, vacancy in the residential real estate sector was reduced from 10.3 percent at year-end 2009 to 8.1 percent at the end of Q1 2010."



"The aggressive vacancy reduction was a direct contributor to the positive second-half performance. Vacancy was cut by 40% across the Group. In residential property alone, vacancy was reduced by nearly half, bringing the vacancy rate down from 16.4% to 10.1%." [December results]

[scburbs] 18/5/2010 17:39

Just to finish the train of thought on a note of relevance! SDIC has a liquidity problem, but does not currently have a solvency problem (assuming its asset values are correct). Of course, a solvent company can be brought down by a liquidity problem.

[scburbs] 18/5/2010 17:29

Kibes,

I agree it is the great battle to not be the least worst. Most countries would rather not be the least worst but somewhere in the middle to avoid their currencies becoming too strong as their economies could do without that drag on growth.

Up until recently the Euro had been seen as the least worst however, the Euro strength was grinding those economies to death with the lack of growth worsening their deficits. The Euro weakening will ease the impact of fiscal tightening for the area (at least for any economies that have significant exports outside the Euro zone) and the likely upshot is a much stronger recovery in Germany.

The advantages that the UK was getting from a strong Euro have started to draw to a close, although sterling is still weak and at a low level against the Euro so these will continue if sterling doesn't rise significantly against the Euro and dollar strength should also continue to aid the UK.

The debt crisis in the Euro zone causing UK gilt yields to fall is another example of this bizarre least worst behaviour. Falling gilt yields in the UK and the expectation that they may stay low due to fiscal tightening is positive for UK property stocks, provided the fiscal tightening doesn't outweigh the massive monetary stimulus (and assuming inflation comes back in line).

The one thing that the UK has done very well is that it is the mirror image of Northern Rock/HBOS, i.e. it has borrowed long and, therefore, its liquidity position is amongst the strongest as most of its issuance needs are mainly new debt rather than massive refinancing as well. The Greeks were brought down by the expiry of a lot of debt which needed refinancing, i.e. exactly the same problem as Northern Rock.

This is primarily a liquidity issue, although that doesn't mean you can't also be insolvent! Those who try and distinguish between the two and say it is one or the other are wide of the mark. There was a massive liquidity issue and some of those facing the liquidity problems were insolvent and some were not. The liquidity problem was created by the fact that no-one was sure who was insolvent and, therefore, liquidity was just hoarded resulting in the need for intervention to restore confidence.

[kibes] 18/5/2010 11:49

scburbs - I can't understand the strength of the US dollar at all. They have just printed around $2 trillion for their TARP and other programmes and will carry on printing more and more as their total debts are now absolutely unpayable. I appreciate that people are piling into the dollar as the currency of last resort but why? In fact the proper answer is that all currencies are now worthless but some are more worthless than others.

The total worldly wealth of everyone in the UK is apparently around £6 trillion. The unfunded liabilities facing the current government are apparently around £4 trillion and rising fast. And they are worried about whether they should cut an entirely trivial £6 billion from public services this year! Dream on. (By the way just saw an advert for a state school headmaster to work as co-headmaster alongside the present incumbent for a year and a half to 'learn the job'. No need for any cuts there obviously! I'm sure we're all delighted to pay for schools to have two headmasters).

[scburbs] 18/5/2010 10:31

Asia is a critical export market for Germany and large chunks are dollar pegged. The German economy is about to rebound strongly in my view as it seems certain that the Euro will remain weakish for sometime (although it may battle with sterling to see which is the weaker of the two!).

"The euro continued its slide today and hit a four-year low against the dollar, sparking talk of parity and concern that it is losing its appeal as a reserve currency."



On the other hand, the largely unjustified (on fundamentals) strength of the dollar may give rise to some headwinds for the US economy.

[scburbs] 17/5/2010 11:56

FT Alphaville has plenty of positive comment on German economy today.

"Macro prospects: The recent crisis is likely to have some effect on confidence, which will have an impact on the economy. But recent indicators suggest that the euro area in aggregate, and Germany in particular, is growing more quickly than previously expected. The global economic recovery remains robust, driven by stimulatory policy in all the major economies. If anything, this crisis is going to delay monetary tightening." [BarCap comment]

"Too much growth pessimism. Consensus expects 1.2% GDP growth in
2010. Germany is 50% larger than peripheral Europe and the best lead indicators are consistent with 3%+ GDP growth. The decline in the euro
adds nearly 1% to real GDP-the recent weakness in the euro offsets all the tightening measures announced in recent weeks in peripheral Europe. On
our economic scorecard, Europe now has the best rate of change in economic momentum and the loosest monetary conditions." [Credit Suisse]

[taylor20] 14/5/2010 13:12

wskill, If it was Barclays it might be worth giving them a ring see:



"Must strongly compliment Barclays for their brilliant response to a glitsch yesterday, when their trading services went off line and all the systems were down.

I dealt in some stock and as a result was quite considerably out of pocket because my orders placed at the beginning of the day could not be realised for over three hours. Barclays phoned me up - without any pressure from me - and volunteered a full compensation, on the basis that I had been unable to trade immediately at the times I placed my orders.

Big cheer for Barclays!"

[wskill] 14/5/2010 11:38

Yes scburbs I wish SDIC had a more able managenent team,will look at both TD Waterhouse and Selftrade, too many problems with my current broker yesterday I was unable to trade for 2 hours in the morning 2% to buy then another 2% to sell for GAGFAH is over the top.

[scburbs] 13/5/2010 22:12

Envirovision, Yes, it does seem surprisingly good value. I added a few more today.

Wskill, I have a mixture of a Selftrade ISA position (same cost as UK stocks) and an IG FX free position.

TRV is a good model for SDIC on how to be robust with banks. TRV has plenty of cash which is ringfenced outside their banking facilities. However, they still breached covenants and entered into negotiations with the banks in order to try and reach agreement without giving up their cash buffer, i.e. they know how to play hardball with the banks who must be pushing much harder when the cash is already there. As to owning both TRV and SDIC, not sure I would want two very highly leveraged exposures to German property, albeit one commercial and one residential. If I had to choose between highly geared German commercial or residential then it would definitely be residential (more stable valuations), however, that is on the key assumption that both sets of management are of equal quality!

[envirovision] 13/5/2010 13:08

TD waterhouse

[wskill] 13/5/2010 13:05

Gagfah tried to get a few with my broker but he wants 1.75% + exchange rate comm at 0.5% can you recomend another broker?

[envirovision] 13/5/2010 10:02

scburbs, thanks for mentioning Gagfah, it does look good value and an excellent income stock and spreads ones currency exposure nicely, i bought some today.

[wskill] 13/5/2010 08:56

Have you looked at TRV at all, I have a holding there as well as SDIC with the new team at TRV it seems to be on the mend and they expect another silo out of cash trap this year ok it is retail but with a recovering German economy.

[scburbs] 12/5/2010 13:35

Gagfah Q1 results out today. I have to say "I agree with ydderF" on this one and I have been taking advantage of the recent share price weakness to build a position larger than my SDIC position.

NAV is €12.52 broadly flat, share price around €5.65 (55% discount). Most importantly FFO in Q1 was €0.21 per share and the dividend is €0.2 per quarter/€0.8 per year (14% dividend yield!).



I like the combination of 14% dividend yield (just about covered, but secure) and 55% NAV discount. I also like the philosophy of disposals and cost cutting and low vacancy (c.5%).

Here is an example of some of the eminently sensible comment from the 2009 finals.

"We intend to continue [€520m property sold in 2009] to harvest our portfolio particularly through the sale of more mature assets, so long as there is a gap between the value of our properties and the implied value of our assets in the public market"



In addition its gearing is lower at around 67% LTV and the fixed borrowing rate is lower at 3.79% with the major maturity in 2013.

Overall a much better bet than SDIC and probably a mistake on my part to get sucked in by the fact that SDIC was much cheaper on a NAV basis and the fact that it seemed obvious how SDIC should be turned around, particularly given the fact that all the competitors seemed to be getting it right.

SDIC could still turn it around by doing the right things, but my confidence that they will do so is low. SDIC has much more multibagging potential (assuming no equity issue), but I expect Gagfah to nearly double (to c.€10) whilst throwing off 14% dividend yield. I guess I can live with that as a return!

[lagosboy] 07/5/2010 17:24

schrubs

I presume that such a poor system is a Govt measure to prevent over charging tenants up front.

Clearly it leaves the landlord exposed to potential loss particularly if their re-charge and collection systems are as poor as you suggest at SDIC.

Does this company actually do anything correctly? I am sure I could run it more effeciently and I am certainly not a sector expert like yourself and Davidosh.

Have a good weekend, it has got to be better than the week.....markets are closed !

[scburbs] 07/5/2010 14:26

It has not had much attention, but the presentation (P13) flags 2008 service charges being reconciled for recharging to tenants in Q1/2 2010! This would appear to be clear incompetence and the tenant churn will increase the irrecoverable percentage.

It is stated as a core objective to recover these amounts as soon as possible, but this has clearly not been the case for 2008 costs!

[scburbs] 07/5/2010 14:22

Geographical outliers effectively means poorly located property, but no evidence how much of the portfolio this represents.

"Properties with the potential for sale are those that are least operationally efficient or are geographical outliers"

[scburbs] 07/5/2010 14:14

Lagosboy,

Personally I haven't seen enough evidence to be able to conclude on the quality of the portfolio. The key indicator is the vacancy rate and I am not clear whether that is due to the conflict driven excessive refurbishment programme or a large percentage of structural vacancy due to a weak portfolio.

Given they only expect to reduce vacancy slowly at a time when other companies with large vacancies are reporting massive improvements I have become increasingly concerned that it is the latter. However, other than the vacancy rate I don't have much real evidence to confirm or refute this.