Speymill Share Discussion Threads

[short1] 27/9/2007 12:47

Nick----> Have Lewis Charles produced further note?If so could I ask you to send me it? TIA

[nickcduk] 27/9/2007 12:08

Forecasts seem to have been reduced somewhat.

Lewis Charles Securities
24-09-07 BUY 4.72 7.70 2.90 9.94 17.10 7.20

[dfgo] 27/9/2007 11:53

Speymill Acquisition


RNS Number:4931E
Speymill Macau Property Company PLC
26 September 2007


26 September 2007

Speymill Macau Property Company plc ("MCAU" or the "Company")

Conditional US$ 187 million Residential Investment

[lbo] 25/9/2007 16:01

Biggest eurozone economy hitting the brakes: Germany's Ifo


FRANKFURT (AFP) - German business sentiment fell in September for the fifth month in a row, a widely-watched survey showed Tuesday, prompting analysts to say that the eurozone's biggest economy had clearly hit the brakes

[password] 25/9/2007 13:29

Thanks for Posting Ivor - very interesting read.

[ivor hunch] 25/9/2007 12:38

Interesting article from t1ps:

Since teetering on the brink of financial oblivion in 2005, Speymill (SYG.L) has completely changed direction and now focuses on property investment. With excellent capital gains forecast for its two funds in Germany and one in Macau, China we think that the share price can almost double in just
under 18 months. On a 2008 multiple of just 5 and with further upside from new funds to be launched we recommend that you buy.

Founded as Wigmore in 1990, this company joined AIM in 2002 and a year later acquired building and maintenance company Blanchards. This turned out to be a bad move, with the business performing badly. In 2005, Blanchards and ground maintenance company First National Property Maintenance were sold. At the same time, the company changed its management team and refocused its strategy. The old core Speymill property management, construction & refurbishment business is still operational but the exciting aspect of this business is its fund management division.

The company's property management division - GOAL Service - was founded in September 2005. The business is a joint venture of which Speymill owns 51% and the remaining 49% is owned by German citizen Florian Lanz. Lanz's company - LAGO Service - has around 800 apartments in Berlin which are managed by GOAL and additionally the division has a contract to manage the property interests of private investment company, Burnbrae, in Germany. Burnbrae currently owns around 1,200 apartments in Berlin and its sole beneficiary is Jim Mellon, who we will cover in more detail later.

Speymill Contracts, which is the only remaining business left from Wigmore, deals with the construction, fit out and refurbishment of properties in the UK. Established in 1995 the division focuses on the hospitality and leisure sectors and has contracts with various blue chip companies. Speymill is the current preferred contractor for both Whitbread and Sleepwell Hotels, which is owned by Burnbrae.

Finally, Speymill Property Managers, established in 2005, is the company's investment fund division which is responsible for finding and managing the acquisition of property and also provides an advisory service to property funds. SPM currently looks after the assets of three funds. The Epicure Berlin Property Company, which closed in November 2005 having raised €127 million is expected to eventually acquire assets, focusing on residential property in Berlin, of around €530 million. Speymill co-advises this fund along with Swiss asset management company Helvetica. GOAL also provides property management services to the properties of the fund.

The second fund Speymill Deutsche Immobilien joined AIM in its own right in March 2006 after raising €234 million. The fund is expected to acquire assets worth €975 million in both residential and commercial property in Germany. The manager of this fund estimates that around 35% of the properties in the portfolio will be in the former East Germany (excluding Berlin) and that around 50% will be located in or around the 15 largest cities in Germany. In November 2006, the company launched its third fund, the Macau European banks. The facility, along with the recently completed forward hedging facility, will mean that the interest costs of the €500 million will not be more than 5% over the next seven years.

The company has also recently announced that it plans to group all its businesses together into a new holding vehicle. Going forward, this will allow an earlier return of surplus capital by way of dividend payments, while also allowing the tax benefits of being domiciled in the Isle of Man. It is the increasingly international focus of Speymill that has caused these changes to be made.

Opportunities and risks

The German property market stands out as an anomaly among European property markets. Since the 1990s, residential property prices in Germany have been flat at best while the UK, France and the Netherlands have seen growth of well over 100%. Now Germany - and Berlin especially - looks like a fantastic investment opportunity with demand for housing set to outstrip supply over the next few years. Average yields for residential properties in Germany range between 5.5% and 9%. This opportunity has also been recognised several large institutions including Goldman Sachs, which purchased 65,000 apartments in Berlin for €2.1 billion in 2005. Florian Lanz's expertise in the German property market as well as support from Burnbrae makes this market a particularly attractive area for Speymill. The Macau fund also has a promising future. The special administrative region of China has seen annual GDP growth of 12% over the past six years and this is expected to continue due to the rapid expansion of the service sector in the region. A report by Goldman Sachs published in October last year forecast property prices to rise by 50% in Macau over the next three years.

Another opportunity for the company lies in the UK property market. In January 2007, the Government announced the go ahead for tax efficient investment vehicle Real Estate Investment Trusts (REITs). In return for tax advantages, REITs have to pay out 95% of their net profits as dividends to investors. Speymill could diversify into the UK in the future, attracted by these tax benefits. REITs are expected to start in Germany within the next year which as well as providing tax advantages will provide a good opportunity for Speymill to sell properties at the end of the funds' life.

The biggest opportunity for Speymill Contracts lies in the growth that the hospitality industry is currently experiencing. The number of adults using branded budget hotels is estimated to have almost doubled since 1999. Whitbread, which owns the budget hotel company Premier Travel Inn intends to increase the number of rooms in Premier to 45,000 by 2010. Burnbrae also intends to significantly expand its Sleepwell range of budget hotels. As preferred contractor for both these companies this represents a good opportunity for Speymill although we must say that the contracts are not guaranteed. Its is also risky for this business to rely heavily on just two customers.

Valuation

The investment case is pretty much a no-brainer. The more funds under management that Speymill achieves, the greater the fees that it will earn. As it stands, if Speymill fails to launch any more funds it should still be able to make pre-tax profit of around £7 million in the calendar year of 2007 - which will generate earnings of around 12p, assuming no tax charge due to its historic losses. It will generate cash from fund management fees and Speymill Contracts so its interest payments should be covered comfortably.

Considering the growth that is forecast in the German and Macau property markets and the backing that the Contract business has from Burnbrae, we can see little downside. In the near future the company will continue to launch new funds and we would be surprised if another fund was not launched by the end of calendar 2007. In calendar 2008 we should see the company posting revenues of around £71.7 million with pre-tax profits of £15 million. Assuming a full tax charge of 30% for the year we should see earnings of around 18p. For a company with such great growth prospects and a strong management team a forward multiple of 10 is not excessive and on that basis we are setting a December 2008 price target of 180p which implies upside of 79%.

[spaceparallax] 24/9/2007 13:13

Things seem to be coming together nicely for Speymill.

[lbo] 24/9/2007 13:00

Anyone hearing about house prices falling in Germany again? I wonder is all the tipping of Speymill a ploy for some to exit before the bad news?

Housing flood in Germany pours cold water on prices

[nickcduk] 24/9/2007 12:36

Agreed that it all looks as though its coming together nicely. Was expecting full year numbers to weighted towards the second half as properties under management increase. The infrastructure costs have been expensed now and operational gearing will ensure second half profits rise sharply. Looking good.

[shanksaj] 24/9/2007 12:27

Not at all disappointed. Its early days as far as EPS is concerned. But everything is looking good. Its cash flow positive, there's cash in the bank, the EPS is positive, and to add to the good cheer a dividend will be paid for this financial year... in the dividend respect, its ahead of what I hoped for for this year. Great results.

[password] 24/9/2007 11:14

Well, that makes nice reading.
So what are peoples opinions on the results? Are they in line with what you expected or are you a little disappointed?

[nickcduk] 31/8/2007 12:15

Now we have a date for the interim results we are likely to see some concerted buying ahead of them. Looks like it is kicking off today but I expect it will continue in the build up. I think market maybe a little tad optimistic about how good they will be. Revenues and profits are likely to be second half weighted as investments continue to be made. We have not had any recent announcements about property acquisitions either which means we could be a little behind forecasts

[short1] 30/8/2007 15:14

triktrak sorry I incorrectly got your e-mail address wrong and have resent it. I hope you had a great trip.

Hiltono

[triktrak] 30/8/2007 01:34

Hiltono,

I'm sorry but I never received an email from you. I'm in Asia at the moment and am catching a flight later today so may not have an opportunity to send the note to you until late Friday. Alternatively, pls ask nickcduk as he should now have the note.

[nickcduk] 29/8/2007 20:15

triktrak

Could you also forward me a copy of the note as well please. Ive sent you an email requesting it.

Thanks in advance.

[hiltono] 29/8/2007 17:26

tricktrac

Many thanks you now have mail

[triktrak] 29/8/2007 12:45

Hiltono,

please send me your email address to [e-mail] and I will send you the note.

[hiltono] 29/8/2007 08:43

triktrak---> Could you be kind enough to copy the full note as I have been on cl website and cannot find it.tia

[nickcduk] 28/8/2007 12:19

Thanks for the update triktrak.

It explains why SYG burst into life last week. I had a feeling there was more to the IoM move than what the company were saying in their announcements. Now we find out they are doing it to save a bundle on tax. Not sure we will see full benefits of earnings in the next set of results as the funds will take a little while yet to be fully invested. I expect the full year results will lead to some heavy buying and the major re-rating the shares deserve.

[triktrak] 28/8/2007 10:16

Lewis Charles brought out a new note on August 24th following the announcement of Speymill's joint venture with Goodman. The analyst suggested the opportunity could be very rewarding.

He's also upped the anticipated eps figures to 23.1p for FY2008 and 27.9p for the following year.

The note concludes:

"We shall be revising our long-term forecasts to include assumptions for the Speymill Goodman JV in due course after release of Speymill's interims. Our forecasts for income from the fund management business remain unchanged. EPS forecasts for 2008 onwards are revised upwards assuming Speymill Group has a zero tax liability following Isle of Man incorporation. Speymill is poised to generate strong cash flow this year and beyond. Strong fundamentals, revenue diversification, and capacity for potential return of cash to shareholders present a more attractive opportunity to buy. We maintain our Buy recommendation."