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Assura plc

Good operational and strategic progress; further dividend increase announced

Assura plc (“Assura”), the specialist healthcare property investor and developer, today announces its results for the year ended 31 March 2024.

Jonathan Murphy, CEO, said:

“We have continued our track record of growth to deliver another period of increased EPRA earnings and dividend, driven by our disciplined approach to investment, extensive sector expertise, and ability to identify new market opportunities. It is these capabilities, underpinned by our strong financial position and secure balance sheet, that make Assura best placed to meet the critical need for new and enhanced healthcare capacity in a community setting.

“Our portfolio continues to deliver high-quality cash flows, against a turbulent economic backdrop, as we further demonstrate our long-term resilience with another year of strong financial performance – increasing rental income by 4% to £143.3 million. Opportunities across broader healthcare markets, each identified as meeting the same underlying demand and offering attractive risk-adjusted investment characteristics, are becoming meaningful contributors to Assura’s £2.7bn portfolio and cash flows. Our five completions reflect the shifting demand in the healthcare sector and include schemes for private operators such as a state-of-the art day case hospital in Kettering as well as our first development in Ireland.

“We have today separately announced a £250m joint venture with USS is an exciting transaction that will further strengthen our balance sheet whilst diversifying the available funding sources to support Assura’s continued growth trajectory. The long-term partnership aligns with cross-party political support for investment into essential NHS community healthcare buildings that are so needed to enable better health outcomes.

“Assura is the partner of choice for the future – best positioned to provide high-quality, sustainable new premises for the delivery of health services in the community – and deliver long-term value for all stakeholders.”

Attractive and resilient assets with another period of EPRA earnings and dividend growth

·    Passing rent roll increased 5% to £150.6 million (2023: £143.4 million) with WAULT of 10.8 years

·    Net rental income up 4% to £143.3 million (2023: £138.0 million)

·    Investment property value £2,708 million (March 2023: £2,738 million)

·    Net Initial Yield (“NIY”) widened 30 basis points to 5.17% (March 2023: 4.87%)

·    EPRA earnings up 6% to £102.3 million (2023: £96.8 million) and EPRA EPS of 3.4p (2023: 3.3p)

·    IFRS loss before tax £28.7 million (2023: £119.2 million) and EPS (1.0)p (2023: (4.0)p), reflecting a 4% like-for-like valuation decline driven by outward yield shift

·    2.4% increase in the quarterly dividend to 0.84 pence per share (3.36 pence on an annual basis) with effect from the July 2024 payment

CEO of Gore Street Capital, the investment manager to the Company, Alex O’Cinneide, commented:

“I’m proud to present a strong set of operational results. The performance highlights ongoing year-on-year growth across the key industry metrics and revenue stability through the clear success of the Company’s strategy. Despite the turbulence seen in the sector, the Company achieved continued growth while demonstrating leadership and resilience.

“Across the sector, it is increasingly apparent that the range of strategies employed by asset owners are yielding increasingly different financial outcomes, with Gore Street producing revenues c.3x of our peers and lowering the volatility of those revenues by 50%. In the GB market, participants largely act as price takers, resulting in similar revenue generation across asset owners. However, it is clear that the impact of capital allocation strategies, whether based on gearing levels, geography concentrations or capital expenditure, is a key component of a company’s long-term viability. Within the sector, we have seen reports of a resurgence in GB revenue based on annualising a very limited data set of revenue over a 15-day period in April. It should be noted that GSF’s estimated average revenue of £15.1 / MW / hr (or £133k / MW / year) for the past 12 months is almost double that of what peers considered as an annualised highlight based on 15 days of trading in GB in April (equating to c.£70k / MW / year). GSF’s consistent outperformance is a testament to our prudent approach to capital allocation and operational excellence. We are the first asset owner to stack revenues in the Irish and German markets, and this control of the optimisation of our portfolio, we believe will continue to produce superior returns.

“The case for energy storage remains strong around the globe, with rising levels of renewable penetration creating an increased system need for flexibility assets. We are also seeing policy drivers emerge to promote the use of assets like those in the Company’s portfolio. The US assets continue to benefit from Investment Tax Credits under the Inflation Reduction Act while new energy storage mandates and potentially even support schemes are expected under new legislation agreed by the European Parliament.

“The combination of positive policy environments, falling technology costs and financial expertise held in-house at the Investment Manager ensures the Company remains well-positioned to deliver sustainable value to our shareholders.”

Dividend Cover:

Due to the Company’s diversified portfolio which has been delivering a consistent average revenue per MW, and the portfolio’s ongoing increase in operational capacity, the Company’s dividend cover has continued to trend upward.

As previously highlighted, the Company reaffirms its dividend target of 7% of NAV for the reported period.

During the Period, the Company achieved an estimated operational dividend cover of 0.78x and an estimated portfolio-level dividend cover of 0.56x. This dividend cover was achieved from an average operational capacity of 311.5MW, achieving an estimated average per MW/hr revenue of £15.1.

Thursday 23 May
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Tritax EuroBox PLC GBP ex-dividend payment date
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Morgan Stanley throws in the towel: S&P 500 price target raised by 20%

Author
Vahid Karaahmetovic

Morgan Stanley has hiked its base case 12-month target price for the S&P 500 by 20%, going from 4,500 to 5,400. The equity research team at Morgan Stanley was continuously calling for a deeper pullback in U.S. stocks, a stance which is now abandoned.

The move comes as the Wall Street giant’s strategists now predict a 19x price-to-earnings (P/E) multiple on 12-month forward earnings per share (EPS) of $283 by June 2026, which equates to a 5,400 forward 12-month price target.

Moreover, their earnings growth projections for 2024 and 2025 are now set at 8% and 13%, respectively, driven by expectations of healthy mid-single-digit top-line growth and margin expansion.

Positive operating leverage is expected to resume, particularly in 2025, supporting these optimistic growth estimates.

“This earnings path is based on our economists growth forecasts, output from our earnings models, and our view that AI diffusion will boost margins starting in 2025,” strategists said.

They also highlighted that services-oriented sectors stand to benefit significantly from AI-fueled productivity gains.

Those include Software & Services, Consumer Services, Health Care Equipment & Services, Financial Services, and Media & Entertainment. According to the strategists, these industries possess greater opportunities for AI-driven efficiency improvements.

“Just these groups alone represent over 25% of expected 2025 net income for the S&P 500, which speaks to the potential margin opportunity,” they wrote.

Morgan Stanley said a modest valuation compression from ~20x to ~19x can be anticipated as earnings rise, which is typical in mid-to-late-cycle periods.

“Normalization in the market multiple is also a function of a higher risk premium (lower rates are a partial offset), which reflects uncertainty around a wider range of potential outcomes,” strategists added.

In this respect, the firm’s bull and bear case targets of 6,350 and 4,200, respectively, now indicate roughly 20% potential upside or downside from the current S&P 500 level.

“In our view, the uncertain backdrop we face warrants an investment approach that can work as market pricing and sector/factor leadership bounce between potential outcomes,” noted the strategists.

“As a result, we continue to recommend a barbell of quality cyclicals (which we see outperforming in a ‘no landing’ scenario) and quality growth (the relative winner in a ‘soft landing’ scenario, in our view),” they continued.

Moreover, Morgan Stanley upgraded Industrials to overweight due to improving earnings revisions and structural drivers, seeing recent underperformance as an attractive entry point.

It also maintains long exposure to defensive sectors like Consumer Staples and Utilities. Meanwhile, large caps are expected to outperform small caps due to stronger earnings revisions, durable margins, and healthier balance sheets.

abrdn European Logistics Income plc

Conclusion of the Strategic Review and Formal Sale Process

The Board of abrdn European Logistics Income plc (the “Company”) announces the outcome of the Strategic Review (the “Strategic Review”) and Formal Sale Process that commenced on 27 November 2023.

Strategic Review Background

The Board launched the Strategic Review recognising that the Company faces a number of challenges, at both a macro and company specific level. As previously noted, these challenges include the Company’s materially uncovered annual target dividend of 5.64 cents (€) per share, a market capitalisation of £234 million¹ liable to deter some potential investors due to lower share liquidity, and the Company’s shares trading at a significant and persistent discount to the net asset value per share. Additionally, in line with its constitutional terms as set out on launch in December 2017, the Company has proposed a continuation vote at the forthcoming Annual General Meeting on 24 June 2024.

Following the commencement of the Strategic Review, the Company’s Financial Adviser, Investec Bank plc (“Investec”) has engaged with a significant number of interested parties with a view to facilitating an indicative proposal which would fulfil the Strategic Review’s objective of maximising returns for Shareholders. Following a period of due diligence, eleven interested parties submitted an initial indicative proposal in the first quarter of 2024. Submissions included proposals regarding all-share mergers, changes to the investment management arrangements, recapitalisation schemes and cash offers for the portfolio or Company. Reflecting continued Shareholder feedback, the Board and Investec focused efforts on those submissions proposing a cash offer for the portfolio or the Company. Access to additional confidential non-public Company information was provided and following a further period of due diligence, remaining interested parties were invited to submit revised offers, as a result of which a limited number of indicative offers were forthcoming.

As part of the Strategic Review, the Company’s investment manager, abrdn Fund Managers Limited (the “Investment Manager”), provided the Board with analysis of, and a proposal involving, a managed disposal of the portfolio in a timely manner. The analysis comprised a range of detailed disposal scenarios over an illustrative period of 12-24 months for the entire portfolio, with capital being returned to Shareholders from Q4 2024 and expected quarterly thereafter; and it considered the impact of likely disposal costs, local applicable capital gains taxes, the ongoing running costs of the Company and the optimal approach to repaying or maximising the value of the Company’s fixed cost debt. 

Outcome of the Strategic Review

Following a detailed review of the options available to the Company and after consultation with its advisers, as well as taking into account feedback received from a number of larger Shareholders, the Board has concluded that it would be in the best interests of Shareholders as a whole to put forward a proposal for a managed wind-down of the Company (the “Managed Wind-Down”). In arriving at this decision, the Board placed particular importance on the following factors:

·      Shareholder Value Maximisation: the indicative potential value from the Managed Wind-Down is materially in excess of the net value achievable from the indicative cash offers received, all of which were subject to a number of preconditions and all of which represented material discounts to the Company’s current net asset value. With an EPRA vacancy rate of 6.5%, the Managed Wind-Down provides the potential opportunity to capture the value associated with letting this vacant space ahead of a disposal.  

·      Feedback from Potential Offerors: a significant majority of interested parties communicated a strong preference to acquire assets within certain geographies or individual assets as an alternative to acquiring the entire portfolio, providing comfort as to the likely level of offeror interest in the Managed Wind-Down process. With a diversified portfolio of 25 urban and mid-box logistics assets with an aggregate value of approximately €616 million, the pool of potential offerors is expected to be large, with many of these parties now conversant with the Company’s assets.

·      Indicative Timeline: while further details will be provided in due course, under the Managed Wind-Down it is expected that the majority of the assets will have been disposed of by the end of the second quarter of 2025. The Company’s advisers have completed a substantial amount of preparatory work including commissioning fully updated technical and environmental due diligence reports for the entire portfolio, ensuring that the Managed Wind-Down process can commence promptly after Shareholder approval of the required amendments to the Company’s investment objective and investment policy.

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A pastel colored growing graph with rising rocket.© Provided by The Motley Fool

By Simon Watkins

FTSE 100 tobacco and nicotine products manufacturer Imperial Brands (LSE: IMB) is one of those shares regularly overlooked by investors.

Companies in this sector, like those in oil, are ethically unpopular nowadays, but this misses a key point, I think.

Another is that because they are overlooked, they tend to offer excellent value. And the final reason in the case of tobacco and nicotine product firms is that they pay high dividend

As a former heavy smoker myself, I think this is the least they owe me.

Regular high dividend payer

In the past four years, working back from 2022, Imperial Brands paid 7.6%, 8.9%, 10.1%, and 11.3% in dividend yields.

Last year, the total dividend was 146.82p. This gives a yield of 7.5% based on the current share price of £19.67.

At this price, just under £11,000 would buy me 559 shares in the firm.

Big passive income generation

So, 559 shares in the company would make me around £825 in dividends in the first year. After 10 years averaging the same yield, I would have another £8,250 on top of the £11,000 or so investment.

This is known as ‘dividend compounding’ and is the same process as compound interest in a bank account. But rather than interest being reinvested, dividend payments are.

If this was done, then the dividend payments after 10 years would total £12,233 instead of £8,250!

This would mean £23,233 in total, paying £1,674 a year in dividends, or £140 a month.

Over 30 years on an average 7.5% yield, the investment pot would total £103,637, paying £7,466 a year, or £622 a month!

Inflation would reduce the buying power of the income, of course. And yields can fall as well as rise, depending on dividend payments and share prices.

However, it highlights that a significant passive income can be generated from relatively small investments in the right stocks if the dividends are reinvested.

££££££££££££

If u are reluctant to invest your hard earned in a dying industry, literally, substitute with your favoured IT u have discovered using your own research.

GL

Darvas boxes drawn on the chart when it broke out.

It’s all random isn’t ?

Upon meeting resistance the price has two options, it either continues to rise or it falls, simples.

Share tips 2024: MoneyWeek’s roundup of the top share tips this week – here’s what the experts think you should buy

If you’ve been keeping a close eye on share tips 2024, then don’t miss this weekly round up of the top stocks to consider for your portfolio each week.

As well as the UK financial pages, we look at publications across the pond for investors who want to diversify their holdings internationally.

From investing in UK equities, European stocks, to finding the best performing stocks in the S&P 500 – here are our top share tips of the week.

1. Alcon (SWX: ALC)
   The Telegraph
   Alcon, the world’s biggest producer of contact lenses and equipment used in eye operations, has enjoyed impressive growth since it was spun out of Swiss pharmaceutical giant Novartis in 2019. Its underlying earnings before interest and tax have climbed by more than 50%. It has invested more in research and development (R&D), helping it launch new products. The shares are not cheap on 25 times forecast earnings, but their appeal lies in the scope for “highly profitable growth over many years to come”. CHF72
2. Domino’s Pizza (NYSE: DPZ)
   The Sunday Times
   Shares in Domino’s Pizza have declined by 13% since January, but the pizza chain is opening 70 new branches this year and saw a 37% jump in orders through its app in the first quarter of 2024. Like-for-like sales were down by 0.5% in the same period, thanks partly to the marketing budget being set aside for a bumper summer, with Euro 2024 kicking off in June. Analysts expect a 10% rise in underlying earnings to £148m in 2024. Domino’s is highly cash-generative, having paid out £427m to investors since March 2021. “Use its share-price dip to tuck in.” 322p
3. GSK (LON: GSK)
   Investors’ Chronicle
   A potential $30bn litigation is being priced into GSK’s shares from US lawsuits over its heartburn drug Zantac. But Citi analysts expect most of the remaining cases to be settled in the next six months for less than $3bn. GSK’s revenues have eclipsed expectations in the past two quarters and it’s launched new products, including the Jemperli cancer drug. Litigation could hurt in the short term, but at this price it’s “worth looking at the bigger, and now far brighter, picture”. 1,733p
4. Relx (LON: REL)
   Shares
   Reliable revenue, profit, and cash-flow growth have allowed Relx to increase dividends consistently, even during the pandemic. The FTSE 100 company has transformed itself from being a publisher into becoming a provider and analyser of business-critical data. It has invested in innovation around data analytics and artificial intelligence. On a 2024 price/ earnings (p/e) ratio of 26.9 the shares are not cheap, but Relx can deliver consistent mid-single-digit growth, making it a good long-term bet. 3,299p

5. 3M (NYSE: MMM)
Barron’s
3M, the American maker of Post-it Notes and Scotch tape, has been struggling with legal problems relating to chemicals and potentially faulty earplugs sold to the US government. But the conglomerate has been making big changes, resulting in a “smaller, safer, and more nimble company”. It spun off its healthcare business, announced legal settlements, reset its dividend and hired a new CEO. Growth is set to improve now that US manufacturing is picking up. $97

6. Smith & Nephew (LON: SN)
   The Mail on Sunday
   Many analysts believe Smith & Nephew (S&N) is undervalued. The medical equipment manufacturer has struggled with supply chains and inflation, particularly in orthopaedics, but new CEO Deepak Nath’s 12-point plan has shown some progress. While the FTSE-100 company is facing headwinds in China and may miss ambitious targets, it is still innovating in robotic surgery and wound care. The stock looks cheap on a low forward earnings rating and yields 3%. S&N is “far from perfect”, but the “company is cheap and worth buying for short-term upside”. 1,007p

THE REST…
MicroSalt (LON: SALT)
Shares
Investors in MicroSalt, a producer of low-sodium salt for food manufacturers, could be rewarded if the Aim-listed company’s patented intellectual property fulfils its potential over the next decade. But revenue remains modest, and the firm has incurred significant operating losses due to investment in the brand and new products. Still, the shares are up 65% on February’s flotation price thanks to the potential to disrupt the food industry. Buy (71p).

Ashmore (LON: ASHM)
The Telegraph
Emerging-market asset manager Ashmore offers a dividend yield of more than 8%, backed by a balance sheet where the net cash pile represents half of the firm’s net assets and a third of its stockmarket valuation. The depressed valuation reflects “gloom and not much of the potential upside”, but the group “could yet emerge from its trough of despond”. Hold (192p).

Barclays (BARC)
Investors’ Chronicle
Barclays has a chequered recent history, but the success of its UK retail business, which launched mobile banking earlier than rivals, suggests that the core business is profitable and competent. Its US investment banking arm could be sold off, which would improve its return on tangible equity, and management is making progress on reducing costs. Buy (202p). Read more on if it’s worth looking at UK banking stocks.

Octopus Renewables Infrastructure Trust (LON: ORIT)
The Mail on Sunday
The Octopus Renewables Infrastructure Trust invests in a range of renewable energy sectors. Factors such as inflation and wind speed have affected revenue and deepened the discount to net asset value. But the group enjoys a steady rate of return, with 84% of revenues fixed or contracted until March 2026, and a solid dividend. The shares are a hold (76p).