A strong set of results from self-storage business Lok’n Store (LOK:AIM) supports a 10% advance in the shares to 411p.
The net asset value (NAV) per share jumps 15.3% to 480p in the 12 months to 31 July (to put this in context house broker FinnCap expected 3% NAV growth).
Earnings are up 12.3% and a secured pipeline of new sites is set to boost available space by nearly a third. The annual dividend is up 10% to 11p.
Lok’n Store is a constituent of our Great Ideas portfolio and you can read our thoughts here.
Chief executive Andrew Jacobs, who founded the business in February 1995, tells Shares the dynamics behind the self-storage market remain strong with supply still failing to keep pace with demand.
This is supporting both rents charged on units and occupancy levels, underpinning ambitious expansion plans to increase the number of stores by 13 to 42 in the coming years.
‘VERY ATTRACTIVE BUYING OPPORTUNITY’
FinnCap analyst Guy Hewett reiterates his ‘buy’ recommendation and ups his price target from 521p to 609p.
He says: ‘Self-storage peers are valued at a 37% premium to latest historic NAV. Lok’nStore is valued at a 22% discount to its July 2018 NAV and a 10% discount to 2017. Alongside our forecast of faster EBITDA growth than its peers, we view this as a very attractive buying opportunity.’
Hewett has a longer term price target of £10.55 based on expectations for cash available for distribution - a key metric employed by the company to determine the level of funds it has to allocate to dividends - to increase rapidly as new stores are brought into operation.
