Upbeat H1 & in line with FY19 estimates
There aren’t too many safe haven UK stocks that can claim to have largely escaped the Brexit bearhug. However we think Watkin Jones, a leading developer/manager of large scale, multi occupancy accommodation, is just such one.This morning the company reported H1’19 results that were ‘in line’ with FY19 expectations, alongside lifting the interim dividend 11.3% to 2.75p (2.47p). Here gross margins climbed 1.9% to 23.7% on sales up 0.5% to £159.1m, reflecting improved mix (re more premium PBSA sites), augmented by higher contributions from BtR and residential housebuilding.
Likewise adjusted PBT rose 10.0% to £26.0m (£23.6m LY) and EPS +7.7% to 8.11p (7.53p LY) - with net cash closing Mar’19 at a comfortable £18.3m (vs £38.4m LY). The latter decline being simply a function of planned investment, BtR/PBSA WIP and the temporary impact a delayed £14m customer payment (now collected), which slipped over the period end.
Going forward, we make no change to our numbers – ED FY19 turnover, EBIT and EPS estimates of £390m, £51.7m and 16.0p respectively - and reiterate the 250p/share SOTP valuation. At 229p, the stock offers an earnings yield of 8.2% (ex cash), which is set to expand in the high single or low double digits for the foreseeable future on the back of predictable revenues and profits. Meaning that in our view, WJG continues to trade at a deserved premium to peers in light of its superior cash generation, asset efficiency, sales visibility and risk profile.
CEO Richard Simpson adding “I continue to be very excited by the opportunities in this business, seeing the market dynamics for both PBSA and BtR so strongly supportive of the Group’s forward sale model. Together with our pipeline of forward sold and secured development sites, this will continue to provide excellent visibility on future earnings and cash flow. Consequently, the Board remains confident in the prospects for the Group.â€
Watkin Jones is a holding company. Through its subsidiaries, Co. is engaged in the property development and the management of properties for multiple residential occupation. Co. operates in the following segments: student accommodation, which is engaged in the development of purpose built student accommodation; build to rent, which is engaged in the development of build to rent accommodation; residential, which is engaged in the development of residential property; and accommodation management, which is engaged in the management of student accommodation and build to rent property.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.