Earnings upgrades brighten the outlook for self-storage concern Lok’n Store (LOK: AIM). It rises 4.3% to 180.5p after consensus-beating figures for the 12 months to August highlight a 27.2% discount to net asset value (NAV).
Its 23-store estate now equates to a 248p per share NAV. Lok’n Store made £1.4 million pre-tax profit, beating house broker Panmure’s £1 million forecasts, on £13 million of sales.
This led management to produce another surprise by declaring a 20% dividend boost to 6p a share, ahead of the expected 5.4p return, signalling their confidence in the earnings potential of the business.
Lok’n Store is in good shape. Net debt fell 12.4% during the year to £22.5 million, giving it a loan-to-value ratio of 28.5% down from the 32.3% recorded last year. It managed to cut liabilities while shaving 1% off its operating costs.
Growth was driven by increased demand, which was up 10.4% during the year giving it 64% occupancy. The value of its estate increased 4.2% to £79.2 million, after the sale and leaseback of its Ashford store (2 April) is taken into account, and it is set to grow further.
Construction is on schedule to get its new Maidenhead store ready for the end of 2013, while its Aldershot outlet is due to open its doors next year.
Panmure Gordon increases its 2014 pre-tax profit forecast from £1.3 million to £1.8 million and adds a new forecast for 2015 of £1.9 million, factoring in a tax charge for the first time of 25% now losses have been utilised and fewer shares in issue following the purchase of shares for treasury.