Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
Thought I’d check-out what the brokers’ recommendations are on Sage on the eve of a trading update – hmmm they are not great:
Strong Buy........2...(6)
Buy....................0...(1)
Neutral..............8...(9)
Sell....................2...(3)
Strong Sell........7...(3) Brackets are the scores of one month ago
........................19...(19)
Source: Share.com
So the brokers have are looking increasingly negatively at Sage. With expectations apparently set so low it will be interesting to see the reaction tomorrow.
Regards, Maddox
Sage have agreed the sale of their payments business SagePay to Elavon for £232m which looks like a good price. Based on the units figures for fy 30Sep18 of £41m revenue and £15m profit - sold at 5.66x revenue and p/e 15.47.
They will be booking a profit on disposal of c. £180m.
Whilst payment functionality is an important need for Sage's clients seamless accounting/payments integration with a range of payment service providers (PSPs)is the market need. Thus SagePay didn't fit strategically and will leave Sage a more focused business on its global ambitions and its fast growing Cloud SaaS business.
With Brexit in view it also de-risks the business by reducing the revenue mix away from the UK and £Sterling exposure.
Regards Maddox
I've been waiting for the CMA to sign-off on the takeover of Liberty Living. Now received, this is a huge step forward for Unite - the number one in the market taking over the number three. It consolidates Unite's position as the market leader and delivers a significant operational scale-up and with it the prospects of efficiency gains.
What I was somewhat surprised by was the quality of the Liberty Living property portfolio, focused similarly to Unite, on top-flight universities and how good the fit is with Unite's own portfolio. There is certainly no drop in quality as a result of this takeover.
One aspect where Liberty were performing better than Unite is half-term lets - filling vacant rooms when the students are at home or on holiday. So there may be a few learning points to be taken on board along with the portfolio.
The deal also brings Liberty's owner, Canada Pension Plan Investment Board ("CPPIB"), on-board as an investor. It is having deep-pocketed long-term strategic investors that gives Unite the fire-power for similar large deals. This is a huge differentiator from the other purpose-built student accommodation (PBSA)specialist developers and managers.
So a fantastic deal in a market that still exhibits positive demand and rental growth. This set against an increasingly worrying macro-economic back-drop. The un-correlated nature of this sector of the property market is a highly attractive characteristic. If, as seems possible, the Treasury feels the need to drop interest rates - our asset-backed cash machine will look ever more a safe haven for financial institutions' money.
Needless to say the share price has performed strongly up 40% for the year to date (1129p as I post). So congratulations to all holders and I'm looking forwards to see how the portfolio integration proceeds and additional value is generated.
Regards Maddox
Further info.
The Govt now is aiming to increase the number of International Students to 600k from the current 450k over the next 10 years.
https://www.theguardian.com/politics/2019/sep/11/uk-work-visas-for-foreign-students-all-you-need-to-know
On the basis that PBSA beds are being built at a rate of 25,000 per year - and UK demand is still rising - it appears that the under-supply that supports rental growth is likely to be maintained.
Regards, Maddox
Excellent news today for all UK Universities and Purpose-Built Student Accommodation (PBSA) providers. The Govt is to change the rules to now allow foreign students studying in the UK to work for a further two years unrestricted. There are currently 450k international students in the UK. This move will undoubtedly boost numbers as the UK has been far less attractive than other top destinations, specifically Australia and US, that already allow students to stay-on to work.
This thankfully reverses the disastrous bone-headed approach introduced by Theresa May as Home Secretary to require students to leave after 4 months. May saw students as a soft target to hit her hopeless immigration targets - despite the hard evidence that very few were over-stayers.
This move applies to all trusted higher education providers and will thus exclude the dodgy language schools that were flouting the immigration rules.
https://www.bbc.co.uk/news/uk-49655719
Regards, Maddox
Yes different, if the ramper truly believes in the merits of the share. No, if they are cynically telling lies to fool others into buying a crap share. The key difference with short attacks is the quantum of the destruction caused Muddy Waters has taken the value of BUR down at the lowest point about 75% for which they no doubt are very proud of themselves.
I find little merit in the argument that the minor miss-practice justifies the larger one. Curious, logic indeed: as if petty tax avoidance justified major corruption.
Regards Maddox
Hi Hereshopin,
I've a significant portion of my portfolio in BUR but haven't posted much. I've thus lost significant value in-line with the share price decline. My larger positions are strong conviction holdings that I do a considerable amount of research into - including meeting the management.
I am not opposed to shorting, but don't do so myself. However, these short attacks on genuine firms, using fictitious and misleading reports, are purely distructive. They serve no purpose, they will discourage less experienced investors from the market and have I know caused a lot of holders to sell their shares at a loss. And why, solely to enrich themselves. Hence, my request to bb readers to send in a complaint to the FCA.
Regards, Maddox
I've filed a market abuse report on Muddy Waters to the FCA; email address:
market.abuse@fca.org.uk
Muddy Waters Capita LLC short attack on Burford Capital
I want to report market abuse by Muddy Water Capital LLC. They manipulated the share price down of Burford Capital limited (BUR) by releasing a false and misleading report into the market in order to financially benefit by short selling Burford shares.
The Muddy Waters 'short report', available here http://d.muddywatersresearch.com/, was published on the 7 August at 9am. It contained fictitious accusations and misleading statements that were clearly intended to frighten investors. The issues raised were comprehensively answered by Burford in their RNS 'Response to Short Attack' on the 8 August 12:45. However, this gave adequate market time to take the price down from circa 1381p on 5 August to below 400p and closing at 605p from which Muddy Waters reportedly made a huge profit.
I have lost significant value as a result of Muddy Waters' profiteering from market manipulation and think the FCA should take regulatory action to prevent this sort of market abuse.
......................................................................
Feel free to follow suit its about time this blatant market manipulation was tackled by the FCA. They have suggested that they are moving to a more robust regulatory regime - so let's see if we can encourage them to act. Numbers of complaints will count so if you feel the same please send an email.
Cheers Maddox
I've filed a market abuse report on Muddy Waters to the FCA; email address:
market.abuse@fca.org.uk
Muddy Waters Capita LLC short attack on Burford Capital
I want to report market abuse by Muddy Water Capital LLC. They manipulated the share price down of Burford Capital limited (BUR) by releasing a false and misleading report into the market in order to financially benefit by short selling Burford shares.
The Muddy Waters 'short report', available here http://d.muddywatersresearch.com/, was published on the 7 August at 9am. It contained fictitious accusations and misleading statements that were clearly intended to frighten investors. The issues raised were comprehensively answered by Burford in their RNS 'Response to Short Attack' on the 8 August 12:45. However, this gave adequate market time to take the price down from circa 1381p on 5 August to below 400p and closing at 605p from which Muddy Waters reportedly made a huge profit.
I have lost significant value as a result of Muddy Waters' profiteering from market manipulation and think the FCA should take regulatory action to prevent this sort of market abuse.
......................................................................
Feel free to follow suit its about time this blatant market manipulation was tackled by the FCA. They have suggested that they are moving to a more robust regulatory regime - so let's see if we can encourage them to act. The number of complaints will count.
Cheers Maddox
A very robust rebuttal and rather than the typical 'company knows of no reason for the decline in the share price' statement they believe it to be as a result of market manipulation and will look to take legal action against the shorters.
The statement also accurately articulates the Short Attack Playbook.
It won't be too difficult to identify the perpetrators, the evidence will be fresh and will be self-identifying themselves at 8am.
Perfect response - looking forward to seeing this play-out.
Regards Maddox
Hi Guys,
This current dip has all the characteristics of a concerted short-attack. No one on here has mentioned the increase in declared short positions immediately prior to the press article. Firms in heavily regulated and sin sectors such as payments and gambling are obvious targets for this treatment. Typically its old stories recycled and given a new twist.
The good thing about shorters is that they'll have to buy back in to close their positions.....
Regards, Maddox
A few select quotes from the Guardian today.....
'Applications from Chinese students to study at UK universities have gone up 30% since last year'
'The Ucas figures also revealed an increase in the number of British 18-year-olds applying for places, up 1% on last year to 275,520 despite a 1.9% fall in the overall 18-year-old population of the UK. EU applicants have also risen 1%, to 50,650 despite the Brexit uncertainty, and Ucas reported a record number of applicants from outside the EU at 81,340, an increase of 8%.'
hTTps://www.theguardian.com/education/2019/jul/11/chinese-students-applications-to-uk-universities-up-by-30
Market fundamentals appear strong, and this also highlights the defensive nature of this sub-sector of the property market.
Regards Maddox
As I said in my post on the 3 June I thought a large deal was in prospect - I didn't however think it was going to be this big! The news that Unite is in the late stages of taking over Liberty Life for c. £1.4bn is clearly a very significant deal.
We don't know the details but a few points to reflect upon:
aa) The price paid will around LL NAV so no premium;
bb) This significantly scales up the student property management arm of Unite; and
cc) Unite's unique structure gives it substantial financial deal capacity.
On this last point Unite's structure of a property development and management company supported by two own managed property funds distinguishes it strategically from it's competitors, the funds are:
USAF £2.26bn – Unite own c.23%; and
LSAV £1.26bn – Unite own 50%.
The financial firepower that this structure provides is a key strategic advantage in what is likely to be a consolidating sector.
Regards, Maddox
Marcus Phayre-Mudge, Fund Manager,TR PROPERTY INVESTMENT TRUST PLC on Unite:
'Student accommodation remains a core holding through Unite Group which returned 19% in the period. The sector has matured since Unite's first purpose built student building 28 years ago and the estimated sector value in the UK alone is now c.£50bn. Given the well flagged 3% fall in the number of UK 18-20 year olds this year ('the Millenium dip'), the drop of just -0.1% in university acceptances is encouraging.
Overseas student numbers from non-EU applicants are up strongly (+6.5%) but it was also encouraging to see EU numbers rise by 2.8% given the Brexit uncertainty. Looking forward the rapid reversal of the demographic dip from 2021 and the steady growth in university participation rates (35% in 2015 to 38% in 2018) remain key positive tailwinds. Unite is constantly improving its portfolio (focusing on 22 key markets) through its development pipeline alongside an exit strategy from subscale locations.'
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/TRY/14091571.html
On 20 May Unite's property fund USAF reported strong demand for their equity raise of £250m. Some of this is going towards purchasing 3 properties off Unite for £111m. As a result Unite's loan-to-value (LTV) drops to 25% and Unites stake in USAF will fall from 25% to 23% as UTG did not put any funds into the equity raise.
So, Unite continues to amass financial firepower that might suggest a large deal is in prospect?
However, this is optimistic speculation on my part – the Uni-deals aren’t exactly coming in thick and fast. Expectations are being set lower – whilst 10 under discussion – the forecast is one to two a year.
The Universities are probably distracted by Brexit and the Higher Education funding review - and sitting tight in the midst of this uncertainty.
Regards Maddox
As Unite bounces around its 52 week high I thought I'd highlight a some very interesting research from property agent Knight Frank:
hTTps://www.knightfrank.co.uk/research/results.aspx?query=student&typeid=research&ordertype=relevance
It appears that Financial Institutions (FIs)continue to be extremely attracted to this sector of the property market. Knight Frank have advised Aberdeen Standard Investments that have made its first investment buying Fulham Palace Studios (74 beds) for £22.6m.
They estimate that global investment into this asset class topped $15bn for the third year in a row. Why is this interesting? Well the UK has an attractive PBSA (purpose-built student accommodation) market and this interest will drive-up prices. this will be reflected in Unite's (and others) portfolio valuations (called 'yield-compression' in the trade.
Demand from overseas students is robust, Brexit or no-Brexit, with a 7.6% rise in overseas student applications for 2018/19. Frank Knight forecast this trend to continue. This demand, and that from first year students remaining in PBSA for their second and third years, will more than off-set the demographic dip in 17/18 year-olds. This will serve to underpin the steady growth in rental income that characterises this sector.
The long-view: Frank Knight forecast an additional 220,000 full-time students by 2030 a 15% rise. As PBSA beds are being built at c.20,000 - 25,000 per year it seems to be unlikely that the current significant under-supply of student beds is going to be reduced.
So, not really surprising that the 52 week high bar is being re-set.
Regards, Maddox
Certainly Thechukkers,
http://webcasting.buchanan.uk.com/broadcast/5c58566da0c50933d2711d23
Regards Maddox
Hi Guys,
I was on the Webcast this am - what a spectacularly great set of results - I'll start with a few key quotes:
"Very strong growth with market share gains in all key territories" "We are growing faster than all our competitors"
"Ladbrokes integration- couldn't be going any better"
"Triennial Review - £2 FOBT - we're ready and we will take market share"
US Market - Kenny - even more bullish now. "We expect to be the market leader - anything else will not be acceptable"
Debt - 3x is comfortable - cost of debt is 4% and debt horizon for refinance is 2022. "GVC is highly cash generative and hence the guidance on dividend policy" Which is 10% p.a. growth on top of the 7% increase this year. Debt leverage will be taken down 0.5x each year going forward.
Hats off to Kenny and team - absolutely perfect execution - made some key promises also on his intention to lead the market on corporate responsibility.
Funnily enough Mr Market had the shares marked down prior to the webcast before coming to his senses and closing up 46p (7.07%) at 697p.
Regards, Maddox
The full year 2018 results are as strong as expected. The highlight for me being the uplift in the dividend by 28% year-on-year to 29p. With the share price closing at 916p as I write the yield is 3.71% which is in it's range of 3 - 4%. However, the advantage of buying into a share like Unite that is growing its income year after year and increasing the dividend pay-out is that on my historic cost of purchase I'm now getting an equivalent yield of over 15%. The much used description of a share like Unite as being a 'bond proxy' couldn't be more wrong in my opinion: It ignores the key attribute that these shares tend to have of increasing their payout whereas bonds don't.
Other key highlights:
EPRA earnings - +25%
EPRA eps - +13% (less due to share issue to buy properties)
EPRA NAV - +10% (following some disposals for re-investment)
The LTV is a highly conservative 29% with the cost of debt falling to 3.8% (4.1% - 2017) and destined to fall to 3.6% as they increase the debt to build-out their current forward development pipeline of 6,579 beds.
When this current pipeline (further additions will be made to it) Unite forecast an EPRA eps of 47p - 51p so a circa 38% - 50% uplift. As 85% of these earnings will be paid-out as dividends we are looking at 39.95p - 43.35p in divs and a projected share price of 1077p - 1168p (based on the current yield). On top of this there are prospective Unite's university partnership deals - that are taking longer to come to fruition than I had hoped.
I'd recommend anyone interested in Unite to look at their H2 Results presentation:
http://www.unite-group.co.uk/investors/reports
that gives excellent background information on the market. There is still a large under capacity of student accommodation, numbers are rising and supply is falling. All this underpins an optimistic outlook despite Brexit or further economic travails.
Regards Maddox
Yes absolutely, I've come to realize that shorters will at some point have to be buyers - to close their positions. As they tend to hunt in packs, they tend to easily overwhelm buyers and drive the market price down. On the plunge, many investors will see price drop as confirmation that the negative analysis is correct (say for example, that the Target Company is going to have to cut the dividend) and hold-off purchasing - further shifting the weight towards sellers rather than buyers. Then the stop-loss trades kick-in further exacerbating the fall.
Eventually, the Target Company's share price is so low that they are paying a dividend, let's say for arguments sake, of 9% plus. At this point anyone that can recognize the pattern will see the opportunity that has been created.
And then, the shorters are going to have to buy-back shares to cover their positions and the share price will start to kick-up.......
All just hypothetical you understand;-)