Sdic Power Discussion Threads

[crawford] 01/6/2010 17:00

Where's Paulypilot?

[scburbs] 01/6/2010 16:50

Hmmm, don't like the look of that one at a glance. A loss making IoM bank that trades above book value and is losing money even if you exclude loan impairments. What is the investment case?

[lagosboy] 01/6/2010 16:29

Forgot to mention, Manx Financial, JM's Isle of Man Bank is in the process of completing an open offer. I hold a few.

[scburbs] 01/6/2010 16:09

Afternoon Lagosboy, Very well thanks, hope you are well.

Good luck with your investment. Once I realised that SDIC was quite capable of massively underperforming its peer group my strategy of adding based on the positive announcements of competitors on the expectation of read across to SDIC became a bit flawed. If you can't be confident that the company will perform at least in line with the market and will make the hard decisions then the investment case becomes much more difficult.

Cost cutting (in particular the excessive SYG fees), bad debts, speed of recharging service charges, disposals, vacancy rates. In all of these areas they appear to be materially underperforming their competitors resulting in a negative cash flow position that they still have not sorted out. Whereas Gagfah generates a cash flow covered 15% income yield on its current share price.

I am holding what I have in the hope that they can get themselves back in line with the market and realise that the hard decisions (primarily being disposals regardless of swap liabilities and dealing with the SYG contract) just have to be taken. After all it would not take very much good work for the share price to double or treble from here.

[lagosboy] 01/6/2010 14:53

Good afternoon Scburbs, hope you are well.


I am now adding to this position, my 10 cents figure that I put forward a month or so ago has been breached, no sign of a placing and no word on the covenant issue so I am adding at these levels purely on the NAV discount.

[envirovision] 31/5/2010 18:55

see Gagfah board on advfn searcg GFJ

[dkpetti] 31/5/2010 13:49

scburbs. Thanks for your reply and advice. I appreciate it.I will consider where to invest or not.

[scburbs] 31/5/2010 13:07

dkpetti, It is the Q1 results from a peer. SDIC is high risk. You may well make a lot of money buying at the current price. However, you need to be prepared to lose the lot. So far the board of SDIC have not impressed and the impression is that it is being run for the benefit of SYG (its manager). They have not shown their ability to take the hard decisions to improve the performance. No doubt they are very cheap, but I will not be adding until the board shows some nous/common sense (and an equity issue at the current price is 100% not that!).

If you want a more gentle introduction to German residential then there are much safer returns available at Gagfah (Xetra:GFJ) where the returns are underpinned by its high dividend yield.

[dkpetti] 31/5/2010 12:02

scburbs. Impressive post,but what does it mean? I'm new to this board. Deutsche-wohnen...deutsche immobilien,..how do they connect? Is it good news for SDIC? I would like to invest.

[scburbs] 31/5/2010 10:26

Deutsche Wohnen Q1 results out: Rents up, cashflow up, vacancy down (quite hard to do when your starting point last year was 4.1%). Clear evidence that the H2 2009 stable (slightly positive) market conditions have continued into 2010. A lot of these German residential companies were struggling in early 2009 and nearly all of them have taken the sensible measures (disposals, vacancies down, cost cutting, equity/convertible bond raising when the time is right) to stabilise their business. There only seems to be only one laggard!

The same laggard who only has two contracts to renegotiate to cut costs (and boost ICR) and is paying well over market rates on those contracts (certainly on the SYG one, less sure on the Goal one). SYG, the company on the other side of those contracts, has no choice but to agree as the future of both companies depend on renegotiating those contracts as without it, SDIC will fail and SYG will become a pointless micro company. However, I can understand why SYG would want to string the negotiations out as long as possible to squeeze the maximum amount out of this clear conflict situation. However, the question is can you have a conflict where one party is AWOL! (or does the conflict just move to your diverse shareholder base who are powerless to do much about it).

"31.05.2010: Turnaround accomplished: Deutsche Wohnen with positive business figures in the first quarter

...

Frankfurt am Main / Berlin, 31 May 2010. Deutsche Wohnen started the year 2010 successfully with the first quarter of 2010. Due to the strong operative development and the omission of special effects, the company has accomplished the turnaround and shows a positive result as of the reporting date.

"As in the financial year 2009 we also succeeded in the first months of 2010 in increasing all major performance indicators compared to the same period last year. With the conclusion of the restructuring phase and the increase in our earnings after taxes to EUR 5.2 million we entered into a new chapter of our corporate history in the first quarter of 2010", explained Michael Zahn, CEO of Deutsche Wohnen AG.

Improvement in FFO

Compared to the previous year the company was able to increase the adjusted earnings before taxes from EUR 4.9 million to EUR 9.1 million. Earnings per share increased from EUR -0.08 to EUR 0.06. Through good operative business activities and the reduced interest paid the Funds from Operations (FFO) improved by 55 % from EUR 0.11 per share to EUR 0.17 per share.

"The FFO per share is now EUR 0.06 higher than for the previous year, which means we have already exceeded the increase of EUR 0.05 forecast for the whole financial year 2010", Zahn said.The debt repayments of the group has been continued in the first quarter of 2010 and as a result of further repayments of financial liabilities led to an improved Loan-to-Value (LTV) ratio of 60.3 %. The cash and cash equivalents increased by EUR 30.0 million to EUR 87.0 million.

Rental increase in core portfolio

The result from rentals was increased in the core portfolio within twelve months by 6.6 % per square metre and month. The rent was thereby able to be increased from 5.22 EUR/m² to 5.37 EUR/m². The vacancy rate decreased from 4.1 % to 3.1 % year on year. In spite of rental shortfalls due to sales the result from residential property management thus stabilised at the same level from the first quarter of 2009.

The notarized sales volume increased compared to the previous year (EUR 31.8 million) to EUR 55.2 million. In housing privatisation significant book profits were achieved with gross margins of 35 %. In institutionalised sales the focus was to streamline the portfolio in structurally weaker regions.

Positive development in 2010

Due to the positive development of FFO in the first quarter of 2010 Deutsche Wohnen sees additional potential here in the coming months.

A further focal point lies in strengthening the portfolio basis. Along with a targeted acquisition strategy, the company is pushing for a sustained streamlining of the portfolio."

[scburbs] 28/5/2010 16:31

Envirovision, You are taxed the same way as a UK dividend, i.e. 40% taxpayers will pay 32.5% (25% effective rate after deemed tax credit) and 50% taxpayers will pay 42.5% (36.1% effective rate after deemed tax credit). Basic rate taxpayers should not pay any more tax.

I am not sure whether the dividend will have any withholding tax applied. If it does you can credit that tax against your UK tax liability on the dividend.

Of course when you have a share that yields as much as Gagfah then ISA/SIPP/Spreadbet positions become very attractive compared to a taxable position.

[lagosboy] 28/5/2010 16:30

Hope veryone is well. I have been down under for a break.

How there been any news ?

I think it might be a good time now to start buying a few.

[envirovision] 28/5/2010 13:36

GFJ offers value, sdic is a train wreck.

Can anyone confirm what the tax is and how is treated on german dividends to UK a resident?

[pomander2] 28/5/2010 13:18

At these levels I am buying all I can afford.

Come on guys, whatever the issues, this stock is trading at 12/2 to 15% of its NAV which is bricks and mortar not goodwill or some other intangible.

[rbonnier] 24/5/2010 12:35

>davidosh

I think you are required round at the LNG thread .

[davidosh] 24/5/2010 11:23

In a climate of rising rents and prices you would think they could sell another batch of properties above book price surely ? Strange that there has been no further update for two months

[scburbs] 24/5/2010 11:04

"German residential rents and price levels moving up
There are indications that the cost of both renting and acquiring residential property is moving steadily upwards in Germany, as long-term trends take a firm hold and demographic patterns become clearer. Jones Lang LaSalle's Residential City Profiles research examined eight large German cities in the second half of 2009 and found that in seven of the eight cities, the average level of rents had risen, despite the shaky economy and uncertainty over employment. The survey found that Munich still shows the highest level of residential rents at an average of €12.30 psqm per month. Düsseldorf, at an average rent of €8.85 psqm per month, showed the biggest increase over the previous six months of 6%. For apartment purchases, Munich topped the list with an average sqm price to buy of €3,500. Frankfurt and Hamburg followed at €2,870 (+2.1%) and €2,750 (+5%) on average, respectively. Prices in Berlin and Düsseldorf also both rose approximately 4% each."

[scburbs] 21/5/2010 10:30

Kibes, I agree it is time to take some money off the table. However, I suspect we disagree about the amount of money to take off the table as for me it is also a good time to look for opportunities. I have reduced my net long position overall, but have still been making selective value acquisitions like Gagfah.

As to Quintain's share price at 5p, that was a great once in a lifetime opportunity (ok a slight exaggeration as at that particularly point in time there were many once in a lifetime opportunities that I was fortunate enough to bag a few of). The best I got in at was between 9 and 10p. Having issued shed loads of shares at 49p the equivalent price now is a lot higher (in the same way that the upside is reduced so is the downside).

[crawford] 21/5/2010 10:25

Spain, Portugal and Ireland aren't in the same league as Greece, Portugal in particular.

Agree with you about USA, it's one of the worst basket cases, can't help thinking they're attacking Europe in order to defend themselves and deflect their dire situation. Only because foreign countries hold so much dollars and they are the reserve safe haven country, they would be long ago busted.

[kibes] 21/5/2010 10:15

crawford - of course any government which can print its own money is not bust by definition. Governments are not like companies in that respect. However I think it is generally accepted that the US for example will never be able to repay its current level of debts. And the rest of the PIIGS which cannot print their own money are very similar to Greece, which is widely regarded as bust.

[crawford] 21/5/2010 09:41

Governments aren't bust by a long shot, sure some of them need to pay down their debts, big deal!

Just because Greece is bust doesn't mean the others are.

[kibes] 21/5/2010 09:38

envirovision - in 2009 all the banks were bust. We now have all governments bust instead. Is that more or less serious? Personally I would say more although the problem can be masked for a considerable time by printing money of course. It will all end in tears.

[kibes] 21/5/2010 09:30

scburbs - in the last few days we have seen the plug being pulled on some property companies which are now relatively well capitalised (having had successful rights issues/fund raisings) eg QED,CAL,WKP. Just look at the chart for QED which is absolutely dire:


free stock charts from www.advfn.com


I cannot forget that QED bottomed out at around 5p last year. Its time to take money off the table in my opinion. Property companies are out. SDIC will drop with all the rest only probably worse because the market doesn't understand it.

[envirovision] 21/5/2010 09:20

Kipes, you should really have posted that on the new thread imo.

Anyway that aside, you have to treat the graph in context. Yes it did bounce of the 2 level, infact a very convincing double bottom. However lets go back to Nov 2008, all the major banks were bust, without goverment action, Gagfahs tenants were going to wake up and not even be able to write a cheque for the rent as their bank and any savings they had would no longer exist.

Then during March 2009, before un precedented money printing. Gagfahs tenants were staring down the barrel of not recession, but depression. They were to expect not to even be able to pay their rent as the majority of them would have been out of work with no chance of finding anouther income.

I know it was only just over a year ago, but i assume you forgot about it, or never understood the gravity of events at the time?

[scburbs] 21/5/2010 09:00

Kibes, No doubt it is on a downwards trend at the moment. From my perspective that is fine as it means I have an opportunity to get in at a good price. I am looking to buy low sell high, but I do not feel the need to try and buy at the bottom.

As an asset class is German residential exposed to the dreaded double dip? I would say it is just about the least exposed and with the Euro falls this reduces the chances of a German double dip so it seems a good safe haven. I would agree it is not as safe as cash, but the returns are much much better.