St.modwen Properties Share Discussion Threads

[kjoco] 20/2/2004 10:48

From today's FT:

A rare bird on brownfield sites: St Modwen manages to trade at a premium by holding a store of development projects.

20 February 2004
Financial Times

St Modwen Properties is rare among UK listed property companies. It trades at a premium to its net asset value while most of the rest of the industry trades at a discount.

The Birmingham-based developer, which specialises in regenerating former industrial or brownfield land, has managed this feat via a deep store of projects, some of which will not be realised for 10-15 years, and all of which it will sell.

As a result, it is constantly throwing off cash as one of its projects after another is completed and sold.

This week the group reported that pre-tax profit rose 17 per cent to Pounds 35m in its last financial year, to November 30, on the back of 50 transactions.

The shares shot up 87 per cent to hit an all-time high of 283p on Wednesday - while its net asset value was 186p. By comparison, the industry trades at an average 19 per cent discount to NAV.

Most property companies are valued according to what they would be worth if they were broken up and sold. Triple-net asset value, which has become a common measure of a company's value in a takeover, takes into account the value of a company's assets minus unrealised capital gains. It also takes in the cost of revaluing debt instruments to their market value.

The industry also trades at a discount as a result of tax leakage. Property companies pay capital gains tax and corporate tax. Their shareholders also pay capital gains tax on their shares and pay tax at their own individual rate.

Anthony Glossop, chief executive, tells investors to value St Modwen as a long-term business rather than according to what it would be worth if it was broken up. He also tells them to consider profits, earnings and cash flow as they would with any non-property company.

"If someone offered to buy us for our net asset value, we would roar with laughter. As a development company, I suppose we take on more risk, but we certainly get more rewards."

One reason is that it is difficult to determine the current value of a development project, whereas estate agency valuers can more easily calculate what a completed building is worth.

According to accounting rules, development property is held on the acquirer's books at cost. The cost of improvements - such as, for example, cleaning up a defunct zinc smelter - are added in. But any subsequent rise in the property's value is not accounted for until it is sold.

The company has assets that are probably worth a great deal more than they are recorded on its books - a factor investors appear to be building into the share price.

The company has said it is on track to double all of its financial figures in the five years from 2002.

St Modwen's projects include regenerating the former Llanwern steelworks in Wales. The developer also owns the Elephant & Castle shopping centre in south London, to be knocked down in regeneration plans for the area.

[sammu] 18/2/2004 23:48

Lonely yes but that's fine when your in a stock like this.

Stan has done a great job, and has now passed the reins on to very capable hands.

The institutions are learning to love the hopper and the visibility that it provides a long way into the future.

Being able to say profits of £20m have already been booked in current year compared to £35m total for last year is great as well.

Having held since 1996 and bought and sold a bit over the last few years I just wish I had more.

Great company - great stock - finally being realised.

Sam

[kjoco] 17/2/2004 08:53

Comment from today's FT:

"St Modwen is one of that rare breed among UK listed property companies: its shares trade at a premium to net asset value, making it one of the most expensive stocks in the sector when measured on that basis. That is because of its deep development "hopper", which is full of long-term projects it develops and sells. In the five years ending November 30, the company managed to exceed its goal of doubling its net asset value per share over the period by achieving 127 per cent growth. It remains on track to maintain this target in the coming year. Because the hopper keeps earnings growth steady, some analysts said it is more appropriate to value the shares on a price/earnings ratio, as if it was a non-property company. Given its growth rate, a p/e of 14 makes St Modwen look like a good buy."

[kjoco] 17/2/2004 08:50

From the Torygraph:

Property group Modwen buys 600-acre steel site

17 February 2004
The Daily Telegraph

ST MODWEN Properties yesterday unveiled an impressive 16pc rise in its net asset value to 186p alongside news of a 600-acre property deal with Corus. St Modwen, which also owns the Elephant & Castle shopping centre, south London and bought 228 acres from MG Rover on a sale and leaseback, enjoyed a 3.7pc increase in the valuation of its pounds 475m property portfolio due to refurbishments, new lettings and rent reviews. Pre-tax profits also increased 17pc to pounds 35m in the full year to the end of November. St Modwen also said profits of pounds 20m from disposals had already completed this year. The shares were unchanged at 254p. This news came as St Modwen announced it had snapped up the former Llanwern steelworks site in Wales from Corus. The regeneration specialist revealed plans to invest more than pounds 200m in the site over the next 10 years.

The project should create 7,000 jobs and lead to a total end value of pounds 750m and the Birmingham-based developer hopes to be on site towards the end of 2005. Richard Froggatt, executive director said: "This is a major part of St Modwen's business and we are looking forward to engaging with all the relevant authorities to bring major new investment in jobs and housing into the area." The acquisition of the Llanwern site is the fifth major land deal St Modwen has completed with steel group Corus, which retains a further 1,500 acres at Llanwern, including the operational steelworks. The company also confirmed that Anthony Glossop is to step up to executive chairman at the annual meeting in April, while Sir Stanley Clarke will become non-executive president and Bill Oliver chief executive. A final dividend of 4.4p, taking the total up 16pc to 6.6p, is payable on April 30.

[kjoco] 16/2/2004 18:57

Citywire verdict on today's results:

Tip Update - hopper happy at St Modwen.

16 February 2004
Citywire

St Modwen Properties has announced an eleventh successive year of record results and a healthy Hopper of future opportunities following some major deals last year.

For the year to November the property regeneration group made a profit before tax of £;35 million, up 17% on the previous year.

Earnings per share rose by 18% to 20.1p and net assets by 16% to 186p per share, which includes 4% uplift in the value of Modwens investment portfolio through refurbishments, new lettings and rent reviews. The dividend has been increased by a generous 16% to 6.6p a share.

The best performing sectors for development projects were distribution, retail and residential and the portfolio of opportunities was boosted by the acquisition of a total 440 acres in Avonmouth and Longbridge.

Additional working partnerships have been formed with government bodies and local authorities, which has become common practise over the last few years due to the mutual benefits to both parties within the sector.

Sir Stanley Clarke, the groups chairman and soon to be Life President, said: 'The Company's current financial year has started exceptionally well with a total of over £;20 million of property profits already completed or under contract.

He added: 'I, therefore, look forward with confidence to St Modwen achieving its twelfth consecutive record year, which is bold but realistic given the companys current position within the market and the pipeline of developments.

At the groups next AGM Sir Stanley Clarke is handing over to Anthony Glossop who becomes executive chairman. Bill Oliver will take his position as chief executive.

Citywire Verdict:

It gets increasingly hard to fault St Modwen a decent growing company with a good thing going. Management is well respected and having built the business over many years on the basis of a sound, risk adverse strategy, there is little reason to suspect that complacency will set in.

The results today were at the top end of expectations and should be welcomed by the market. Current forecasts for this year include earnings per share of 23.2p and a dividend of 7.48p but there is scope for a small upgrade.

This time last year the company was licking its wounds having dropped out of the FTSE All Share Index due to lack of trading volume, but activity has increased and the company is sitting comfortably in the FTSE 250, which means it will also be considered fairly seriously by those who follow the larger caps.

Property stocks carry the risks of property cycles and the endless pursuit of planning permission, which is getting tougher rather than more liberal. On the other hand, the need and desire for regeneration programmes - the core of Modwen's strategy - grows strong every day.

We have previously recommended the shares at lower levels but thought the price was about right just ahead of net assets (around 200p). At 254p the shares are not cheap based on NAV but they still trade on a fairly low rating of 11 times this years earnings and a premium to net asset value of over 30%. But thats the price of quality. Strong hold.

[supersturrock] 27/1/2004 15:56

Dont like this weakness ahead of the figures next month- Rights or Placing to fund the Longbridge deal ?

[capercaillie] 19/1/2004 17:03

Back to normal today.

[kjoco] 10/1/2004 15:42

Telegraph article:

St Modwen delivers
Questor Column

10 January 2004
The Daily Telegraph

LEGEND has it that St Modwen cured Alfred the Great of illness when Alfred was still a young boy. Tales also tell of her receiving land near Tamworth from a Mercian king on which she founded a nunnery. What better name then for the regeneration company St Modwen Properties. Founded by racing entrepreneur Sir Stanley Clarke, the property company specialises in breathing new life into rundown schemes such as the shopping centres at Elephant & Castle and Edmonton Green in Enfield, north London. But that's not all. St Modwen's investment portfolio, made up of shopping centres and offices across the country, is high yielding and generates the cash to buy more stock. And St Modwen has been on the acquisition trail. This week, the group revealed a pounds 42.5m sale and leaseback arrangement with MG Rover, the latest in a string of high-profile corporate deals. Executive director Richard Froggatt has completed similar transactions with Corus, Invensys and Alstom over the past 18 months.

Under the leadership of the much respected deputy chairman and chief executive, Anthony Glossop, and managing director Bill Oliver, the company delivers like clockwork. It has enjoyed 11 consecutive years of record full-year results and its long-term objective is to double the net worth of the company every five years. There is no sign yet of this growth slowing down. The shares, at around 230p this week, are trading at about 12 times prospective earnings and are yielding 3pc. Compared with its peers, which mostly trade at a discount to net asset value, St Modwen trades at an unusual 37pc premium. This looks expensive, but the group deserves its premium rating and is worth holding.

[capercaillie] 10/1/2004 12:51

Good to hear. What quality of contact were you speaking to? Received a good write up in the Telegraph today.

[sandbank] 10/1/2004 08:08

capercallie: I spoke to the firm a few days ago and found them quite straight and helpful. They do have a portfolio of excellent deals on the cooker including Brighton Pier which is a longer-term and potentially risky, but also potentially profitable, development.

[capercaillie] 09/1/2004 23:43

Has struggled for direction since entering ftse 250

[capercaillie] 23/12/2003 17:50

Up today. Back on track?

[boonyed] 23/12/2003 10:42

Supermum
Very interesting post, I hadn't looked at this from the chartists point of view, do you know what the 200 day MA is? and in your opinion where is the line of resistance?

Morose
I have posted about our stop loss strategy before, but in brief, we buy a stock and place a trailing stop loss (i.e. the stop loss rises with the share price), this stop loss will be either 15 or 25% depending on the 'volatility' of that particular share.
If the price reaches 75% profit, we sell enough to recoup our initial investment and the remainder rides on a 10% trailing stop loss. This strategy, is however, under review.
It seems silly to sell the bulk of a holding just to get back our initial investment, we may as well just let the whole thing ride on a 10%er. The thing that has made us look at the strategy is the fact that we now have an account with Comdirect, they give us the abiliity to set automatic sell orders for a given price range, it works a treat.
We were holding ULE when they recently went into freefall, we had already set a sell order as we were showing a healthy profit, the price drastically reduced on a broker update. Comdirect sold our holding slightly below the stop loss, but they went on to fall another 11% during the day.
If we can rely on someone else to sell at a price that we set, then there seems little point in selling the majority of the holding just to break even.

BOON

[supermum] 22/12/2003 23:19

I was asked for my views on this stock - I hope you don't mind me posting - I am not a holder - here they are - you don't have to read it!!!

sandbank
SMP - wow that was a bit of a wallop it got today. That stock has only gone up for the last 10 years!! if you stand back and look at 10 years on weekly chart you can see it might just be coming back to hit the MA lines. Its certainly oversold big time.
I have just had a peek at the bb. looks like there is going to be a bad RNS out. and this is being priced in now before the shorters get in. where its going - I wouldn't like to think at the mo. The 20/50 day MA has been dropped through like they dont exist. the chart shows that this was coming for the last 2 weeks - the stochatics turned down from 25th November, Divergence - the first sign and should never be ignored. if/when this stock hits the 200day MA - imo it will prob go into freefall. Maybe a good short to watch for.
I'm certainly going to watch it I hope your stop loss kicked in

SM

[capercaillie] 22/12/2003 20:54

You dont always have to sell the lot. Why not sell a part holding and hedge your bets?

[morose] 22/12/2003 20:40

boon
Our club is also out on stop loss.
How do you operate your stop loss?
Is it a trailing 10%, ie. rises behind the share price?
We always find it a problem selling at the right time.I'm reluctant to be out of this one as there doesn't seem to be any bad newsflow, but we have to lock in our 30% profit even tho this looks like a giant MM tree shake to me.
What do you think?

[boonyed] 22/12/2003 16:55

I'm pretty sure SMP own only part of the Goodyear site, though I could be wrong. They lease the ground back to Goodyear and the main Office block to a large insurance Company. If anything, I would have thought that this would be seen as good news, as the whole area will be ideal for re-development, being close to the City of Woolyhampton and the motorway network, very similar in fact to the site in Halesowen.

The Company have also submitted a revised planning application for the development of the Dudley zoo and castle site. They got outline planning permission earlier in the year but have made improvments following calculations that the seperate sites would not generate the visitor numbers that were forecast. Interesting times!!

I don't understand the fall in price, on the surface nothing fundamental has changed with this company, but we may not have the full story yet!!

Anyway our club is out as they fell through the automatic 10% stop loss. I am still going to watch them and look at reccomending them if they come down a little further.

BOON

[sandbank] 22/12/2003 16:47

LADDEN: GOODYEAR Apparently Goodyear are just stopping the manufacture of car tyres at Wolverhampton - but they're continuing the production of agricultural tyres. Evne if Goodyear gave notice to quit (which it does not seem as if they have) the site would be a prime redevelopment area which would be a profitable location for residential development
BRIGHTON PIER: Agreed - this is a rather riskier project and quite a long-term one but it looks as though the battle against local opposition (primarily according to local gossip - motivated by the other Brighton Pier) is gradually being ground down. There is now a 10,000 signature petition circulating in favour of the St Modwen project.
SHARE PRICE: The company can't say anything because it's the closed period but looking at the trades it seems today mostly smallish lots. CAPERCALLIE is right. It is after all, the end of the year. Time for institutions or people who've been in SMP a while to book profits and make their year-end book look better.
Notice that as soon as investors realised how far they'd retraced the demand - and the price - picked back up again. The shares could still be considered expensive because they're at a premium to NAV but the company has a 5 YEAR land bank - what Investor's Chronicle describes as a "hopper" full of future projects, buildings, sites etc from which can already predict future growth.
SMP has outperformed the property sector by 185% in the last 5 years. There is nothing nasty in the woodshed here - or even at the end of the pier. I'm holding my SMP shares because I think the upward correction which started this afternoon will continue in the New Year

[capercaillie] 22/12/2003 16:25

Could it simply be a market correction? They have had a super run during 2003.

[ladden] 22/12/2003 13:21

Good Year's Factory in Wolverhamptonhave just announced in the local paper that they are closing this week. Could this fact alter the share's price?

[boonyed] 22/12/2003 10:26

There are a number of write ups on the Brighton pier scheme (links below), it is interesing to see that the Guardian reckon the re-development is unlikely to start until 2005, with a completion date of late 2006. Perhaps that is the reason for the current trend.

There is also a public inquiry taking place about funding and also a mounting appeal against the plans for the redevelopment of the seafront area.





BOON

[liverpoolunity] 20/12/2003 23:05

Just found on the Motley Fool SMP to join the FTSE 250 on Monday. This was posted on Friday, I would have thought that this should have sent the price up not down as it will register more with the institutions, but maybe the MMs were looking for more stock for Monday. We shall see.

[morose] 20/12/2003 10:36

Volume of sales small and no news - just MM's trying to drum up business by inducing panic sales

[capercaillie] 19/12/2003 23:17

I believe it was announced today the Heritage Trust or some such body that the rebuild of Brighton Pier in which SMP is involved can proceed. Dont know if its connected to the fall.