Raven Property Group

LN: RAV

Market Cap£186.9m

Last Close 33p

Raven Property Group invests mainly in Class A warehouses in Russia let to large Russian and international companies, commercial office space in St Petersburg and a third-party logistics company in Russia. It aims to deliver progressive distributions to shareholders over the long term.

Investment summary

H121 results were published on 31 August and showed strong occupancy, which had since increased further (to 96%), and increasing rents, driving property valuation gains. Reported in sterling, operational gains were obscured by a lower average rouble value (-15% vs H120) although the spot rate has improved since H1. NOI increased from RUB5.2bn to RUB5.4bn but was 13% lower in sterling. Underlying earnings nevertheless improved to £17.3m (H120: £10.4m loss). The balance sheet showed little H1 FX impact and revaluation gains were the main driver of 13% growth in NAV or 25% growth in NAV/share to 50p, further benefiting from accretive share repurchases. Interest rates have risen further (to 7.5%) to combat the increase in inflation (7.4% in September), increasing rouble borrowing costs above our forecasts. The higher rouble versus sterling mitigates the negative impact on net earnings and is clearly positive for NAV.

Y/E Dec	Revenue (£m)	EBITDA (£m)	PBT (£m)	EPS (p)	P/E (x)	P/CF (x)
2019A	127.0	N/A	54.0	6.4	5.6	N/A
2020A	113.0	N/A	(25.0)	(6.9)	N/A	N/A
2021E	102.0	N/A	30.0	4.1	8.8	N/A
2022E	104.0	N/A	16.0	1.6	22.5	N/A

Industry outlook

The Russian Economics Ministry has increased its 2021 GDP growth forecast to 3.8% as the economy recovers from the impacts of the pandemic. Strong demand for warehouse space, especially driven by e-commerce activity, combined with low vacancy, a lack of new supply, and increased construction costs are generating increased rents and valuations.

Last updated on 25/11/2021