Watkin Jones

http://www.watkinjonesplc.com/ TICKER: WJG     EXCHANGE: AIM

Watkin Jones provides an end-to-end solution in developing large scale, multi occupancy accommodation projects, with a primary focus on the student accommodation market.

LATEST REPORTS

 
Watkin Jones Plc
Published: May 29 2018

CEO Mark Watkins Jones and CFO Philip Byrom discuss the interim results and outlook for Watkin Jones Plc.
 
Onwards and upwards
Published: May 22 2018

'Success breeds success' is a crucial, yet under-appreciated, concept when it comes to investing. A philosophy embraced by Watkin Jones plc, who under the tutelage of CEO Mark Watkin Jones since 2003, has been transformed from regional Welsh house-builder to become one of the UK’s leading developers of purpose built student accommodation (PBSA) and Build-to-Rent (BTR) properties. 
The good news for shareholders is that this ‘X-factor’ is set to continue. The company announcing last Friday that it had appointed another accomplished leader to take over the helm - with Richard Simpson (42), previously Unite’s Property Director, set to join on 2 January 2019.
Additionally, nestled within today’s strong H1 results – where adjusted PBT came in at £23.6m (+11.9%) on turnover up 18.4% to £158.3m - was news that the Board is “exploring ways to establish a new BTR investment vehicle”. Here, we suspect that WJG would retain a minority stake, but could nonetheless generate attractive returns, acting as either the fund manager and/or lettings agent.
According to the British Property Federation, the aggregate BTR housing stock (either completed, under-construction or in planning) at the end of Mar’18 jumped 30% YoY to 117.8k units. Jacqui Daly (Savills Director) predicting “at this rate, we expect [the industry] could double to 200,000 within the next two years”. 
Indeed, only last Friday the company disclosed that it had been selected by M&G Real Estate and Lochailort, to develop a new £68.5m BTR project in Reading, entailing 315 apartments (studio, 1, 2 or 3 bed). Work will commence shortly with completion slated for 2021. Meaning that WJG today has a consented pipeline of >1,000, and is well on the way to hitting its 2023 target of delivering >1,500 units. 
With regards to the numbers, we make no change to our FY18 estimates, supported by circa 80% GP cover (ED estimate). What’s more, WJG closed March with a pristine balance sheet sporting £38.4m of net cash, and declared a 12.3% bump up in the dividend to 2.47p. 
To us, the stock is worth 230p/share - representing a deserved premium to peers, thanks to its superior growth, RoE, asset turns, lower risk profile, robust cashflows and exposure to numerous secular trends.
 
On track for another record year
Published: Apr 05 2018

Watkin Jones (WJG) provides the end-to-end development and management of large scale, multi occupancy accommodation, focusing on purpose built student accommodation (PBSA) and residential build to rent (BTR).
According to respected economists (Jorda, Knoll, Kuvshinov, Schularick, and Taylor), UK housing has delivered annualised real returns (net inflation) of 5.6% between 1870-2015 and 6.8% since 1980 – split roughly 60:40 capital:rental – vs 2.8% and 4.7% pa respectively for bonds. Better still, when included in a basket of 16 major OECD countries, residential property has also been considerably more stable than equities. Never failing to increase in value over a 5-year period, and generating the highest risk-weighted gains of any asset class. 
Sure, certain well-heeled Central London neighbourhoods have been experiencing price deflation of late. Yet for Watkin Jones’ bread-and-butter of supplying purpose-built student accommodation, conditions remain buoyant. Underpinned by favourable demographics, healthy capital inflows and robust demand from international students (eg from China & India) who typically seek quality living space. 
Looking ahead we expect these trends to be sustained, and believe similar dynamics are taking root in the fledgling residential Build-to-Rent market. And this morning the Board released a positive trading statement for the 6 months ending March 2018, adding that demand remains strong, and H1 results (due on 22nd May) would be in line with FY18 expectations.
WJG has a development pipeline of >9,800 student beds (vs 9,120 Sept’17), of which around 8,300 (or 85%, up from 7,497 at y/e) possess planning permission. All sites due for delivery this academic year (3,415 beds) have been forward sold with another 5 (2,675 beds) slated for 2019/20. Thus providing excellent forward visibility.
We make no change to our forecasts, supported by circa 80% GP cover (ED estimate) for FY18. We calculate the stock is worth 225p/share - representing a deserved premium to peers, thanks to its superior RoE, lower risk profile, robust cashflows and exposure to numerous secular trends.
 
An interview with the CEO and CFO about results and prospects
Published: Jan 19 2018

Mark Watkin Jones, CEO and Phil Byrom, CFO, discuss the Group's recent results announcement at the Equity Development offices.
 
Excellent end of term report
Published: Jan 18 2018

Watkin Jones has reported a strong set of full year results with PBT, EPS and DPS in line with expectations. At this stage in the cycle the attractions of investing in a company that operates a lower risk model in two of the most attractive areas of residential real estate, namely purpose-built student accommodation (PBSA) and build to rent sector (BTR) are apparent, and we believe the stock justifies a significant premium to other housebuilders.
Watkin Jones’ shares trade on 13.7x PER (calendarised) for September 2018 with a 3.5% dividend yield. For the following year the PER falls to 12.9x and a yield of 3.8%. In our opinion this is undemanding given the group’s consistent long term record of profit growth, its strong cash generation profile, its excellent medium term prospects as a leading developer within the growing UK student accommodation market and the growth opportunity within its BTR operation. 13.7x represents a 39% premium to the Housebuilding sector on PER.
We continue to argue that Watkin Jones offers considerably better medium term visibility and growth than the average Housebuilder and should therefore trade at a 30-50% PER premium to the sector.
 
Ready for the start of term
Published: Nov 02 2017

Watkin Jones’ year-end trading statement outlines its successful completion of all 10 planned student accommodation developments for FY2017, and reinforces the excellent visibility it enjoys due to its strong development pipeline and robust forward sales position. The company operates in two of the hottest areas of residential real estate, namely purpose-built student accommodation (PBSA) and build to rent sector (BTR). 
The largest division of Watkin Jones has again performed well in 2017 with 10 developments being completed as planned (3,314 beds). Looking into 2018, 10 planned developments (3,415 beds) have been forward sold and provide the company with significant visibility. The 2019 position is also strong with five developments (2,959 beds) already forward sold. In addition, the company has secured an additional eight sites (2,959 beds) for proposed development between 2019 and 2021.
Watkin Jones is continuing to build momentum in the BTR sector. The Group has ownership of three development sites and is in separate negotiations on several other opportunities, from which it is targeting to develop approximately 1,500 units between 2018 and 2022, subject to securing the necessary planning consents. 
The asset management business, Fresh Property Group, which includes Fresh Student Living and Five Nine Living, continue to progress in line with expectations. The number of beds under management has increased by 30% over the past year (16,082 beds) across 53 schemes for 2017/18.
Watkin Jones’ shares trade on 14.9x PER for September 2018 with a 3.1% dividend yield. For the following year the PER falls to 14.3x and a yield of 3.4%. This premium rating is deserved given its long-term record of growth, strong cash generation, and excellent medium term prospects.
The shares have risen by 60% since we initiated in March, and currently trade at just over a 40% premium to the house building sector. However, we think this is deserved and looking forward the risks to forecasts are on the upside.
 
View the Results Webinar
Published: Jun 19 2017

You can now hear Mark Watkin Jones, Chief Executive Officer, present the half year results to 31 March 2017 on behalf of Watkin Jones. 
To view simply click on the video below. 

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2017
Graduating with honours
Published: Jun 02 2017

Watkin Jones has reported a robust set of interim results with PBT, EPS and DPS coming in ahead of our expectations. This company operates in two of the hottest areas of residential real estate, namely purpose-built student accommodation (PBSA) and build to rent sector (BTR) and it operates a lower risk model. Therefore we believe it should trade at a bigger premium to other housebuilders. 

The company produced another strong set of results during H1. Despite an expected 8.4% decline in H1 revenues, significant margin gains drove a 23.8% increase in gross profits. Adjusted PBT rose 26.6% to £21.1m; EPS +28.8% to 6.7p. The company reported an interim DPS of 2.2p.

PBSA development: the company's largest division reported strong profit growth H1 with a significant increase in gross margins. Visibility of sales and earnings is very high in this division. It is set to have a very good second half with growth in revenues and margins YOY.

PBSA management: Fresh Student Living continues to grow its number of beds under management. It currently has 12,117 beds under management and this is set to grow to 19,532 by 2020.

BTR development: WJG completed its first BTR development in Leeds in the period. With a site with planning secured in Sutton and two further sites progressing through planning, we believe the medium term opportunity within this space is significant.

BTR management: the newest part of the group, Five Nine manages the Leeds scheme and currently has 535 BTR units under management.  

Watkin Jones’ shares trade on 14.1x PER for September 2017 with a 3.5% dividend yield. For the following year the PER falls to 12.9x and a yield of 3.8%. This appears undemanding given the group’s consistent long term record of' growth, its strong cash generation, and its excellent medium term prospects as a leading developer within the growing UK student accommodation market.

Watkin Jones - Equity Development Investor Forum, March 2017
Published: Apr 03 2017

Mark Watkin Jones, Chief Executive Officer, gives an overview of Watkin Jones.
Building Value
Published: Mar 28 2017

Watkin Jones is one of the UK’s leading property development companies involved in two of the hottest areas of residential real estate, namely the purpose-built student accommodation (PBSA) and private rented sector (PRS) segments.  Watkin Jones is very well positioned to grow market share and profits despite operating a very low risk and working capital light business model.
The long term fundamentals for PBSA are very positive with growing student numbers, strong demand for quality accommodation and institutional investors hungry for exposure. In PBSA, Watkin Jones enjoys excellent visibility of revenues, profits and cashflow through a combination of a strong development pipeline and a forward sales model. It also has an exceptionally good delivery track record and of gaining planning consents. The company's Fresh Student Living business offers vertical integration for the company within the student accommodation market and offers an end-to-end solution for institutional investors.
The PRS business is very well positioned to take advantage of continued rising demand for developments within the private rented sector. The company aims to operate along the same lines as its PBSA business, by developing a strong pipeline and forward selling to institutions. The growth opportunity could be significant in the medium term.
Watkin Jones trades on 11x PER for September 2017 with a 4.3% dividend yield. For the following year Watkin Jones’ PER falls to 10x and a yield of 4.5% This appears very undemanding given the group’s consistent long term record of growth, its strong cash generation, and its excellent medium term prospects as a leading developer within the growing UK student accommodation market. Watkin Jones currently trades at a 14% premium to the Housebuilding sector on PER but we would argue that this is too small a premium at this stage of the cycle. We conclude that Watkin Jones offers considerably better medium term visibility and growth than the average Housebuilder and should therefore trade at a 30-50% PER premium to the sector.