Quality businesses have many attractions. Not least the ability to expand profitably, even during choppy seas such as today. Enter Watkin Jones, a leading UK developer & manager of large scale, multi occupancy accommodation, focusing on purpose built student accommodation (PBSA) and residential build to rent (BtR).
Yesterday the company announced a slew of property deals and pipeline updates, involving 2,532 PBSA beds, 431 BtR units and 88 residential appts. Here UK demand for new build rental properties remains robust, reflecting a chronic under supply, high employment, increasing real wages and elevated house prices.
What’s more, institutional capital continues to flood into these two sectors, thanks to the sustainable, inflation beating returns - particularly when compared to the >$15 trillion of negative yielding sovereign / investment grade debt.
At 221p, the stock trades at a modest 13.8x PER (or 11.9x ex cash), whilst paying a healthy 3.6% dividend yield. Elsewhere, the firm remains on track to hit our adjusted FY19 PBT and EPS estimates of £51.0m and 16p respectively on revenues of £390m, closing Sept’19 with net cash of £90.4m (worth 35.4p/share). Likewise we make no change to the 250p/share SOTP valuation.
26810392321 - watkin-jones
Return to Watkin Jones
