St Modwen upbeat despite 20% drop in asset value

02/08/2010 (4 h 49 m ago)

It has not been a good year for many property companies and regeneration specialist St Modwen Properties is no exception. The company - whose projects include a college of further education at former Rover site at Longbridge and a development on BP's oil refinery site at Llandarcy - said net asset value had dropped by 20% to 200p a share in 2009. Trading profits fell from £19.5m to £8.4m. But with a £102m equity issue last June, the company says it is in a strong position despite the uncertain property markets and fragile business confidence. Chairman Anthony Glossop said: As yet our portfolio has not seen the resurgence in values experienced in other parts of the property market. But nevertheless I believe that we are now beginning to see important signs of improvement. I am confident that 2010 will see the company returning to growth in profits and net asset value. Buoyed by this confidence, the company's shares have climbed 4.5p to 191pwith analysts at Numis raising their recommendation from add to buy. Meanwhile Keith Crawford at KBC Peel Hunt said The much needed £102m equity issue in June 2009 significantly reduced the financing risk of St Modwen. A reduction in overheads and increased rental income has meant the company managed to return a trading profit of £8.4m. However, cash preservation remains a key focus of the company with no dividend payable in respect of 2009. We are confident the company will restart dividends in the coming year and have factored in a dividend of 3.9p per share. Although the value of the portfolio continued to decline in the second half, we expect that it has now troughed in terms of its valuation and is likely to have improved since November 2009. With the shares trading at a 30% discount to our revised net asset value per share of 268p and management continuing to progress in marshalling/value added opportunities, we remain hopeful of the prospects for St Modwen over the coming year. St Modwen Properties Nick Fletcher guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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