Attractive outlook for warehouse provider

A strong FY20 portfolio performance underpins a compelling core investment case. Other initiatives could, by the second half of this year, help refocus attention on the appeal of a well-let warehouse and logistics portfolio, ideally placed to capitalise on emerging trends for Russian businesses and consumers.

Raven operates mainly in Roubles but reports in Sterling, which makes its results sensitive to Russia’s economy and exchange rate, the latter vulnerable to specific macro trends such as oil prices and sanctions. At the current valuation, however, much of the perceived risk already looks priced in.

The underlying FY20 result was a 20% increase in underlying earnings to £19.0m, a fairer reflection of both an improving domestic property market, and increased portfolio occupancy from 90% to 94%. FY20 produced a £14.2m IFRS loss that includes adverse forex, (FY19: £46.0m profit) and a £45.7m one-off profit from the redesignation of cumulative preference shares. A £53.1m year-end cash balance (end FY19: £68.1m) is fully sufficient to cover projected requirements.

Looking ahead, we see reasons for optimism. Russia’s economy has rebounded post lockdown, Raven has seen steady demand from large supermarket and e-commerce players. Hence the shares (and the Rouble) arguably fully discount some of the more pessimistic outlooks.