Conygar on the lookout for deals as interim NAV improves 2.7%

Conygar Investment Company (LON:CIC) announced interim results this morning with core NAV increasing by 2.7% over the interim period to 154p per share; a premium of 30.5% to the current share price of 118p. Excluding disposals, the underlying profit increased to £3.4m from £1.1m in the prior period  with the company citing cost cutting and reduced financing costs as key drivers.

During the period the company acquired 86 acres of land in Pembrokeshire for £14m to add to its significant Welsh development portfolio and a 4.67% stake in the Local Shopping REIT plc.  With cash and facilities providing £98m in funds for further acquisitions Robert Ware, Chief Executive, commented that "we are content to wait patiently for the considerable amount of stock to emerge which is necessary for the inevitable deleveraging … We are unashamedly opportunistic but not gamblers".

Buyback and NAV discount

The company remains proactive in its efforts to close the wide discount to net asset value with an ongoing share buy back campaign.  Over the interim period the company acquired 9.8% of its share capital at an average price of 115.6p per share.   In  its last research note in February broker Cenkos described the NAV discount as "contrasting sharply" with a peer group including London and Stamford, Max Property and Metric Property,  and called the company's shares "astoundingly cheap".

Investment Portfolio

The group's investment properties were valued end March at £142.8m, remaining broadly level on a like for like basis, providing a rent roll of £12.4m.  Remaining proactive in asset management, the company has been successful in letting an 8.448 sq ft space to Atex Group in Reading for £185,856 annually, and made disposals of three properties over the period for a total consideration of £8.8m.

Development Projects

Conygar updated the market on its "increasingly exciting" Welsh Development Portfolio which spans storage and marina developments at locations from Pembroke Dock, Haverfordwest, Holyhead and Fishguard.   The company reported that the local authorities have approved a phased approach at Pembroke Dock giving a "massive boost to the viability of the entire project" and that marketing is underway at the development at Parc Cybi, Anglesey.  Broker Cenkos stated in its last research note  that "in total, the 4 sites have a potential end value of £400-500m and Conygar could realise a profit of over £50m in the next 5 years." 

Market Outlook

The board believes the economic outlook remains difficult and that asking prices for property are in many cases too high.  With significant cash available for acquisitions and a belief that deleveraging is still to come from the banks and their more highly levered clients the company continues to wait patiently and assess various opportunities.