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15/3/2020
17:07 | alter ego: The WJG share price has dropped significantly, along with many others since the last post on this board. Looking back at the result published on 14 January, there was no mention of covid-19, just the impact of Brexit. The landscape has changed materially since then so is covid-19 a real threat? With net cash and a growing market, is this "baby" being unfairly thrown out with the bathwater?
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18/2/2020
10:40 | 888icb: This company continues to impress and is reflected in the continuing March north of the share price.
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14/1/2020
13:07 | cordwainer: in case clicking the mouse too much effort vs scrolling, here is Mr S Thompson (IC):
Watkin Jones (WJG:241.5p), a construction group specialising in purpose-built student accommodation (PBSA) and build-to-rent (BtR) housing, has delivered a total return to shareholders of 162 per cent since I suggested buying at the IPO, and with good reason ('A profitable education', 3 Apr 2016).
I flagged up today’s record annual results when the share price was 214p in a detailed analysis (‘On solid foundations’, 11 Nov 2019), and raised my target price to 275p to reflect the group’s solid earnings visibility, and strong fundamentals supporting both end user and investor demand across all parts of its business. Bearing this in mind, chief executive Richard Simpson noted during our results call that [investor] sentiment has definitely lifted since the general election as institutional investors look to invest capital in a more benign political backdrop, adding weight to Knight Frank’s forecast that total investment in PBSA is set to rise from £51bn in 2019 to £65bn by 2025. It's good news for capital flows into BtR, too.
All 2,609 of the group’s PBSA beds under construction for the current financial year are forward sold, and a further 2,376 of the 3,253 beds for 2020/21 are either forward sold or in the hands of solicitors. Add to that a planned ramp up in BtR construction projects – the group has nine developments encompassing 2,312 apartments of which 1,102 units are already forward sold – and it’s easy to see why analysts at brokerage Peel Hunt expect current year adjusted earnings per share (EPS) to increase from 16.7p to 18.2p, rising to 21.1p in 2020/21. Analysts at Jefferies are even more bullish.
Moreover, with the group holding net cash of 30p a share, and the capital-light business model generating an eye-watering return on equity of 29.9 per cent, expect the progressive dividend (the board declared a 10 per cent hike in the payout per share to 8.35p) to increase to 9p a share this year and could be north of 10p a share in 2020/21. Buy.
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22/11/2019
08:44 | rivaldo: Tipped here - and he doesn't even mention the £90m cash pile (or 35p per share):
Https://uk.finance.yahoo.com/news/forget-cash-isas-dividend-growth-082520532.html
"Forget Cash ISAs! A dividend growth stock I’d buy today and hold for 10 years
For investors seeking chubby income flows from their investments, Watkin Jones (LSE: WJG) merits close attention. For the financial year to September 2020 the forward yield sits at 3.8%. Compare this plump reading with the best interest rate of around 1.5% that Cash ISA holders can expect, for instance, as well as the 3.3% forward average offered up by Britain’s mid-caps.
The state of the near-term yield isn’t the only reason why dividend chasers need to pay the construction giant close attention, though. Thanks to the rate at which Watkin Jones throws out cash, annual payouts have exploded in recent years and were up 15.2% in the last fiscal year alone.
And there’s plenty of reason to expect them to keep blooming, as recent trading details from the business this week showed.
Glad all over
The AIM-quoted company – which caters primarily to the student accommodation and buy-to-rent sectors – declared that “trading remained strong through the final quarter of the [fiscal] year” and that “all of the group’s business segments performed well and delivered on their operational objectives for the year.”
Watkin Jones has got the bit between its teeth and is making brilliant progress on all fronts. For the current financial year, all seven of its purpose-built student accommodation (PBSA) developments, totalling 2,603 beds, have been sold. Another 1,928 beds spanning four schemes have been offloaded for fiscal 2021. Meanwhile the business has 159 build-to-rent (BtR) flats forward-sold for the present period and another 782 for the next financial year.
And there could be much, much more to come. According to Watkin Jones, “a number of other PBSA and BtR opportunities [are] in advanced stages of negotiation,” the successful conclusion of which would add an extra 2,025 student beds and 1,150 BtR apartments to the pipeline for delivery in the two years from fiscal 2021.
Share price strength
No wonder, then, that City analysts are expecting Watkin Jones to keep growing earnings by a healthy rate over the near term at least, with an 11% bottom-line rise currently being predicted. And there’s two further reasons to cheer this perky prediction: it results in a cheap forward price-to-earnings ratio of 14.5 times. It also leads to those aforementioned expectations that dividends will keep growing at a healthy rate.
A predicted 8.1p per share reward for the year just passed is predicted to rise to 9p in fiscal 2020, up 11.1% year on year, and as I said, a forecast that creates a bulky near-4% yield. The mid-cap looks in great shape to meet this figure, too, what with dividend cover sitting bang on the broadly accepted safety benchmark of 2 times and cash flow remaining strong.
Watkin Jones’s share price has rocketed 15% in the past six months and is now dealing at two-year peaks around 240p, though given its exceptional trading momentum and its undemanding forward earnings multiple I believe there’s plenty of scope for it to keep rising.
For investors seeking hot profits and dividend growth at low cost I reckon it’s a brilliant share to buy today."
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14/11/2019
11:27 | rivaldo: FYI here's Simon Thompson's IC tip from a few days ago, raising his target price to 275p...
"Watkin Jones (WJG:214p), a construction group specialising in purpose-built student accommodation (PBSA) and private rented housing, has issued a raft of bullish updates since I last rated the shares a buy, at 207.5p, in the summer (‘Watkin Jones on for a record year’, 31 Jul 2019). The share price subsequently hit a high of 241p late last month, but has pulled back after the founding Watkin Jones family sold down 25m shares, at 210p, through an institutional placing late on Friday, 8 November to reduced their stake to 45.5m shares, or 18 per cent of the issued share capital. The institutions have got themselves a good deal and one which you can avail yourself of close to their buy in price. There are sound reasons for doing so.
In the past two decades, Watkin Jones has delivered 41,000 student beds across 123 sites, making it one of the largest players in the PBSA market. It’s a market that is still undersupplied as the UK’s current stock of 639,000 PBSA beds in the UK (Jones Lang La Salle estimate) remains well below the 750,000 intake of first year and international students, so new beds coming onto the market can be easily absorbed. Furthermore, the UK has 12 of the world's top 100 universities, which continues to attract international students to our shores, both for the high quality of education, and value on offer, too. Sterling has depreciated by more than 17 per cent against both the US dollar and euro in the past four years.
The asset class is also attracting hefty investment flows from institutional investors, enticed by an above-average yield profile compared with other mainstream property asset classes, strong and stable performance both in terms of investment yield and occupancy levels, and a relatively low-risk income stream with the ability to capture annual rental growth. Net yields are around 4.5 per cent on new London PBSA developments, and even higher still (5.2 per cent) in the regions.
This positive dynamic explains why Watkin Jones not only forward sold and completed all six PBSA developments (2,723 beds) in the 12 months to 30 September 2019, but has already forward sold all seven of the PBSA developments (2,609 beds) slated for construction in the 2019/20 financial year. Furthermore, 1,928 beds have been forward sold for delivery in the 2020/21 financial year and the directors are aiming to deliver an additional 1,300 beds in that 12-month period, too, of which agreed sales on 448 beds are in the hands of solicitors. The scaling up of the operation is part of a strategic plan to increase the delivery rate to 3,500 PBSA beds over the next five years.
Build-to-Rent opportunity scaling up
It’s not the only attractive business opportunity that Watkin Jones is exploiting. The group is replicating the success of its PBSA capital-light and forward-funded business model in the Build-to-Rent (BtR) market. In fact, the forward sold and secured BtR pipeline now compromises 1,750 apartments across eight sites, the vast majority of which are slated for delivery in the 2020/21 and 2021/22 financial years. In addition, management is in advanced negotiations to acquire sites that would deliver an additional 1,150 apartments by September 2023. This area of the market is attracting huge institutional investment flows, too.
For example, the likes of L&G, Aberdeen Standard, M&G, and Invesco have been increasing their exposure, attracted by the UK’s ongoing population growth (the UK's population is forecast to grow by 7.5m by 2035), the need for additional rented accommodation and attractive investment yields (3.8 per cent in prime regional sites). Indeed, there are now 148,000 BtR apartments under the construction in the UK, with an estimated gross development value of £10.6bn, according to the British Property Federation. Analysts at property agency Savills estimate that the BtR segment of the housing stock could ultimately account for 1.7m homes, or a third of the private rented sector.
Record profit to drive share price to new highs
Given this positive backdrop, it’s hardly surprising that Watkin Jones is on course to report another record annual performance. Analyst Paul Hill at Equity Development estimates that adjusted pre-tax profits will edge up to £51m to deliver earnings per share (EPS) of 16p in the 12 months to 30 September 2019 to support a hike in the dividend per share from 7.6p to 8p. Moreover, cash continues to build strongly. Mr Hill believes Watkin Jones now has net funds of £90m (35p a share), or three times higher than three years ago, highlighting the highly cash-generative nature of its business model.
On this basis, Watkin Jones’ shares are effectively being priced on a cash-adjusted price/earnings (PE) ratio of 11 for the year just ended, a rating that fails to take into account its attractive earnings growth profile over the coming years – analysts forecast EPS of 17.1p, 19.2p and 22.7p, for the next three financial years – and the ongoing bumper cash generation that underpins the board’s progressive dividend policy. Indeed, analysts expect a current year payout per share of 8.6p, rising to 9.6p in 2020/21, and 11.3p in 2021/22 based on a 50 per cent payout ratio of net profits. Even after factoring in the higher cash cost of the dividend, both my financial models and those of analysts suggest that Watkin Jones’ net funds could increase by more than 40 per cent to £128m (50p a share) by September 2022.
Trading on a current year forward cash-adjusted PE ratio of 10, and offering a prospective dividend yield of 4 per cent, I feel that Watkin Jones' share price will resume its upward move once the dust settles after the founding family's sell down, so much so that I have raised my target price from 265p to 275p. That's still a discount to Peel Hunt’s raised fair value estimate of 280p (from 265p) and Equity Development’s upgraded sum-of-the-parts valuation of 300p (from 250p).
So, ahead of annual results on Tuesday, 14 January 2020, I continue to rate the shares in a positive light, having first suggested buying at 100p at the IPO ('A profitable education', 3 Apr 2016), since when the board has paid out dividends per share of 20.95p to give a total return of 134 per cent. Buy."
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03/10/2019
16:16 | cordwainer: Good chance the share price will beat the market with these positive updates.
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03/10/2019
07:13 | rivaldo: Excellent transactions update issued today, just after the year end, with lots of successful deals/completions/approvals.
With the Capital Markets Day set to spread the word on 5th November, today's update hopefully sets the tone nicely for the trading update on the same day:
Https://uk.advfn.com/stock-market/london/watkin-jones-WJG/share-news/Watkin-Jones-plc-Development-Transaction-Update/80853936
" Summary:
-- Forward fund of 762 unit mixed PBSA and Build to Rent development in Sheffield
-- Sale of 400 student beds across two schemes in Chester
-- Agreements for the development of 638 beds across two schemes in Glasgow and Edinburgh
-- Forward fund of two Build to Rent schemes, comprising 325 units, in Sutton and Bournemouth
-- Forward sale of a 35 apartment residential development in Chester
-- Further development of the PBSA pipeline with new sites secured in Edinburgh and Bath and planning obtained for the Group's site in Bristol"
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24/9/2019
15:29 | rivaldo: Downing's Monthly Income Fund has today issued its newsletter covering August. WJG is 4.14% of its portfolio, and Downing have this to say:
"Watkin Jones, a developer and constructor of multi-occupancy residential property assets, saw its share price tick up during the period on no significant news. In a trading update issued at the end of July, management stated that it continued to see positive momentum across all key areas of the business. The final quarter of the financial year is typically a busy period in terms of forward sale activity, and this is expected to be the case again this year. Given the defensive nature of the business we believe the shares offer good value at these levels."
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29/7/2019
07:40 | rivaldo: An excellent development update today, securing even greater visibility going forward and with positive progress on a number of developments in both BTR and student accommodation:
Https://uk.advfn.com/stock-market/london/watkin-jones-WJG/share-news/Watkin-Jones-plc-Development-Update/80413482
Nice confidence in the forward outlook too:
"Richard Simpson, Chief Executive Officer of Watkin Jones, said: "We continue to see positive momentum across all key areas of the business. Our six PBSA schemes for delivery in FY 2019 are on track for completion ahead of the 2019/20 academic year and we continue to see an encouraging pipeline of potential future sites across the UK. The final quarter of the financial year is typically a busy period for the Group in terms of forward sale activity and we expect that to be the case again this year in respect of both the PBSA and Build to Rent pipelines.
Our expertise in acquiring sites at attractive prices, securing planning consent and then forward selling the schemes to a wide range of investors not only validates our business model but also demonstrates that, even in a more complex market, our strategy remains extremely resilient. The sectors in which we operate are highly attractive to investors and we continue to make solid progress against our internal targets."
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21/1/2019
11:03 | rivaldo: Newly tipped here:
Https://www.aol.co.uk/news/2019/01/19/one-neil-woodford-growth-stock-ia-d-buy-and-one-ia-d-sell/?guccounter=1
"I believe Woodford is on far more solid ground with Watkin Jones, and I continue to rate this stock a ‘buy’. The company is a UK leader in multi-occupancy residential property, with a focus on the student accommodation and build-to-rent sectors. There’s good growth here, but I also think this positioning — together with the group’s accommodation management arm — could provide it with more resilience through the economic cycle than companies focused on some of the other areas of the property market.
Earlier this week, Watkin Jones posted record results for its financial year ended 30 September. Earnings increased 14% and its board upped the dividend by 15%. At the current share price, we’re looking at a valuation of 13.7 times trailing earnings, and a running dividend yield of 3.5%. I view this as an attractive investment proposition."
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PLUS1
