Strong ecommerce performance has boosted the commercial property group’s share price to a high not seen for 13 years
Increase in online shopping sees SEGRO post positive results
- Reported 6.5% increase in pre-tax profits for the first half of the year
- 2.6% increase in its NAV to 718p due to a rise in the value of its property portfolio to £11.2bn
- Shares rise 2% in early trading, while investors welcome a 9.5% increase in the dividend
- Recommendation: While the prospects for growth remain much of this is already priced into the shares as they trade at a 38% premium to the NAV, but we retain our Hold recommendation
Commercial property group SEGRO showed today that it has benefitted from the growth in online shopping during the coronavirus crisis thanks to a rise in demand for its warehouses. It reported a 6.5% increase in pre-tax profits for the first half of the year, stripping out one-off factors, to £140.4m, and a 2.6% increase in its NAV to 718p thanks to a rise in the value of its property portfolio to £11.2bn. In contrast to many other commercial property groups, SEGRO reported that it collected 90% of the rent due in July. The group believes the trend towards ecommerce is likely to continue and has over £1bn of financing in place to fund its development of new properties. The pipeline of pre-let developments is almost twice as large now as it was a year ago.
The market reacted positively to today’s news with a 2% rise in the share price which takes them up to a level not seen for 13 years. Better news for investors was that the dividend was increased by 9.5%, which is highly unusual in the market and reflects the company’s confidence. While the prospects for growth remain good it must be said that much of this is already priced into the shares as they trade at a 38% premium to the NAV, but we retain our Hold recommendation.
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