Unite Share Discussion Threads

[maddox] 16/3/2009 20:32

and KBC then goes on to say...

"Despite concerns about the need to keep gearing under control, the broker believes the shares remain worth holding."

THE SHARES REMAIN WORTH HOLDING.

Regards, Maddox ENDS

[fast investor] 16/3/2009 19:00

," KBC notes, but adds that the disposals were below market rate and although they have reduced the gearing of the holding company "the fall in valuation of Unite's wholly owned portfolio as well as its share of the Fund assets has meant gearing has increased from 106% to 131% at Dec 2008." ENDS


SELLING BELOW MARKET RATE.

[fast investor] 16/3/2009 18:57

Devonlad, companys have debt because they are not producing enough free cash and this is usualy due to poor management who havent budgeted or planned forward growth correctly.

The companys who do produce the free cash flow dont need to borrow. they grow organicaly.

Its as simple as that.

Many a good company can have a strong balance sheet, but if it doesnt have the cash flow to pay creditors, thats when the problems start.

And Maddox, I dont care that the pro body have valued the assets at such and such. The pace of this economic downturn means that if they were to arrive tomorrow for a valuation what is the betting that the total asset value would be less than previously estimated only a few months earlier.

We know from the broker KBC that they have been selling assets off below market rate...... NOW WHY WOULD THAT BE IF THEY WERENT UNDER PRESSURE.

Think about it.

[devonlad] 16/3/2009 12:57

FI, I think that you are confused about the debt issue. Debt is not a bad thing, it allows firms to borrow to grow a business, without the ability to borrow, there would be no growth. UTG have borrowed to grow in the student accomodation sector and have a 99% occupancy rate. They then sell propeties that have been fully developed to cover debt that will allow them to borrow more money in the long run. It's a classic business model and it works, 99% occupancy rate, I think that is the key.

Granted, some companies ate over stratched but debt only becomes an issue when the business model stops working, plenty of great cases that provide you with a basis for shorting but in UTG's case, you are clearly wrong! Not being personal, just like the debate!

If the occupancy rate was 75%, given the debt, this would be a dead duck but in fact it is a great business that will easily clear this recession because of its business model. IMHO, this is one of a very few really good buying opportunities, I definitely wouldn't be shorting it that's for sure as there are many more companies with failing business models and debt and that is the key to great shorting!

[dvda] 16/3/2009 11:46

FI,

Every time you post negative comments the price seems to go up. Could we have some more please?

[maddox] 16/3/2009 10:32

There we are FI - a buying opportunity for you!

[maddox] 16/3/2009 10:30

FI,

Unite's property is carried in their books at 'market value' as defined by the Royal Institute of Chartered Surveyors' Manual; and it's holding up very well considering. The investment portfolio valuation fell by only 5% - by comparison with the IPD Property Index that fell on average by 27%!

Unite mainly sells its mature property into the UK Student Accommodation Fund - 19% of which it ownes. It sold £171m to it in December. Since the year-end Unite reported that it has also sold £15m of property to third parties "at consideration levels supportive of December 2008 values".

Regards, Maddox

[fast investor] 16/3/2009 09:49

SP falling away now.

[tinker10] 16/3/2009 09:30

After a 75% rise in a week, it wouldn't be suprising to see a few sellers taking their profits and a small dip in the share price.

Still looks cheap to me though.

[fast investor] 16/3/2009 09:24

Certainly gone into its shell today.

Prelude to selling?.

[fast investor] 16/3/2009 01:38

And lets not forget Maddox anybody can sell anything for knock down prices....

"The £58m equity raising and asset disposals to third parties by the USAF Fund have been useful and allowed Unite to subsequently sell a further £171m of product to USAF late in the year," KBC notes, but adds that the disposals were below market rate and although they have reduced the gearing of the holding company "the fall in valuation of Unite's wholly owned portfolio as well as its share of the Fund assets has meant gearing has increased from 106% to 131% at Dec 2008."

[fast investor] 16/3/2009 01:30

Theres a lot who do follow smirky Burns.

Watch them jump ship tomorrow.

Debt is debt and as to be paid back, you cannot argue with that and at a time when the companys assets are firstly being sold to pay off debt and secondly diminishing in value due to economic reasons, the future doesnt look that hot for UTG.

[maddox] 16/3/2009 00:08

FI,

The net debt of £531m is actually, loan facilities of £1137m, of which £642m is drawn, less £112m cash held and thus net debt of £530m. This net debt is net of cash NOT net of Assets.

This debt is finance for £780m independently valued property assets. These property assets are performing exceedingly well - 99% occupancy and achieved like for like revenue growth of 9.5% last year.

Unite have stated they will be operationally cash positive next year.

Unite are a property development company - they borrow money, develop property and then sell it to pay off the debt. If that can be described as 'selling the family silver' then that is what they do. The fact that they can still sell property in the current market suggests that they retain control of their own destiny and grow or shrink their B/S as they see fit.

So I guess Investors Chronicle might have had the above in mind when they stated:

"Unite is managing its cash carefully, yet its shares trade 81 per cent below their underlying net asset value."

I doubt they were blindly following Smirky Burns!?

Regards, Maddox

[dcomd99] 15/3/2009 19:23

FI

As it happens, I sold before I saw Robbies target. I sold because I felt it had risen enough for now. On previous days it looked strong throughout. On Friday it peaked and then fell back, so I sold.

[fast investor] 15/3/2009 12:51

Dont you mean you saw Robbies target price and jumped ship.??.....

"purchasing 5,000 at 51.23. Target 70 stop 45"... ENDS

An excelent example of what I was pointing to in post 108.

The script couldnt have been written better.

[dcomd99] 15/3/2009 11:57

Personally, I have no time for FI. I don't trust him, or his motives. He arrived suddenly, determined to undermine confidence, and no doubt he will disappear when he has done his work.

However, I decided to sell on Friday. I had a 50% gain, and don't want to be too greedy. On fundamentals, I think it's still cheap, but these are mad times and lots will be tempted to extract a quick profit.

If the share has risen because of share tips, this makes it even more dangerous in the short term. If you hold, I hope it does well for you.

I really have no idea whether it's going up or down (just like FI, and everybody else!). I was very happy to buy at 46p and happy to sell at 70p.

[fast investor] 14/3/2009 03:01

Maddox, LOL....

"Unite is managing its cash carefully, yet its shares trade 81 per cent below their underlying net asset value."......... ENDS

And what the IC fail to mention is.......

- the net debt figure of £531 million pounds and the interest to be paid on this

- the annual loss of £129 million pounds approx 100% greater than the previous year

- the fact that the companys operational cash flow is negative

- and last but not least the business is selling off the silver ware to avoid a dilutive fund raising and breach of bank covenants.

AND

the reasons its moved up so highly in the last few days is, the fact that,

- the stock is held tightly and as a high beta

- the management have said thet will try to manage the debt by selling assets and not fund raising thus.. giving holders short term relief

- and last but not least the tipster robbie (smirkey ) burns tipped it on wednesday.... this from his site...

Unite (UTG) produced results not as bad as expected and I've gone back in there for a quick buck, I hope, purchasing 5,000 at 51.23. Target 70 stop 45. Again I was a bit rubbish on the price as again I was a bit late on this actually missing ten points but better late than never (maybe).... ENDS

Of course his small purchase wont affect the share price in any way but the lemmings who follow him in purchasing will.

And remember this when he leaves they are likely to aswell.

[maddox] 14/3/2009 00:11

Call-logger,

I'll leave it to Investors Chronicle to give you an opinion: they repeated their Buy recommendation today:

"Unite is managing its cash carefully, yet its shares trade 81 per cent below their underlying net asset value."

Nevertheless, in these markets I cannot criticise anyone for bagging, what a >50% plus profit in a week.

Regards, Maddox

[call-logger] 13/3/2009 19:08

Sold today

Had hoped that this post would follow one saying "You'd have to be mad to sell now" but, c'est la vie, this was the closest I could get.

[royfox] 13/3/2009 14:01

Myabe the fact there was strong director buying had something to do with the rise too?

It seems plenty of scaremongers don't actually read the news section, hilarous!!

[maddox] 13/3/2009 14:01

dvda,

Surely, you'd be stupid to short UTG if robbie smirky burns has tipped them?!?!

Regards, Maddox

[dvda] 13/3/2009 11:21

"In fact Ive been informed the only reason this one as spiked up is because the tipster robbie (smirkey) burns as tipped it in the last couple of days."

Who informed you of the above? How do they know that this is the "only" reason for the recent rise?

[fast investor] 13/3/2009 10:06

err sorry no I wont.

In fact Ive been informed the only reason this one as spiked up is because the tipster robbie (smirkey) burns as tipped it in the last couple of days.

Frequent investor dont they call him?.

Im suprised very suprised as when i used to read his articles (in one of the broadsheets and sky) he always preached the virtues of being carefull/prudent when it came to debt. Think he used 3 xs annual profit to cover debt.

I wouldnt mind but the stock isnt making any profits and its debt is massive and the probability favours the bear case here.

[dcomd99] 13/3/2009 07:43

FI,

KBC had a buy recommendation when the share price was falling. Then they changed it to a hold, and the share price rocketed. Clearly KBC haven't a clue!

What's the problem? Did you believe KBC and shorted them from 40p? From the number of your posts (look, it's going down!, etc), you are clearly desperate. We've got the message OK, so now please go away.

[fast investor] 13/3/2009 02:43

Maddox, this is not a personal thing its a debate i hope between two groups with differing views on how well unite will cope with its massive debt burden.

I think you should have a read of this and consider your position (remembering the broker as a vested interest here)....

Broker snap: KBC's note of caution on Unite
09 Mar, 2009 11:59


Shares in student accommodation provider Unite Group soared Monday after the company narrowed full-year losses and gave an upbeat assessment of future prospects.

However, broker KBC Peel Hunt has taken the opportunity to downgrade the stock from "buy" to "hold" as it believes "the shares will wait to see whether the business model weathers credit uncertainties."

Unite is targeting a reduction in business overheads of £9m per year "but cash flows, we estimate, minus £10m -£20m per annum.," KBC said.

"The £58m equity raising and asset disposals to third parties by the USAF Fund have been useful and allowed Unite to subsequently sell a further £171m of product to USAF late in the year," KBC notes, but adds that the disposals were below market rate and although they have reduced the gearing of the holding company "the fall in valuation of Unite's wholly owned portfolio as well as its share of the Fund assets has meant gearing has increased from 106% to 131% at Dec 2008."

Despite concerns about the need to keep gearing under control, the broker believes the shares remain worth holding.

"We retain the hope that Unite, which is leveraged circa 240% at the low point, can meet its plans," the broker concludes.