Derwent London PLC 

Derwent London PLC (LSE: DLN) is an FTSE 250 Index-listed UK-based United Kingdom-based real estate investment trust (REIT). The Company is an office specialist property regenerator and investor.

Investment Rationale – Watch at GBX 2,034.00

• Technical Update: DLN’s stock price is in the downtrend forming lower lows and lower highs and any fresh uptick might be potentially used to further liquidate the holdings by the investors. For the prices to resume an uptrend the near-term resistance of GBX 2,241.04, needs to be taken off with strong volumes, accompanied by improved financial performance. The increasing interest rates in hybrid workplaces and companies allowing permanent work from home are a few external headwinds the company is facing.
• Trading Update: The Company reported that the Letting activity improved by 10% to GBP 8.5 mn during Q3 FY23 which is above the December 2022 ERV. The YTD lettings during FY23, increased by 8.1% to GBP 27.8 mn, higher than the December 2022 ERV levels.
• Sluggish Profitability Margins: For H1 FY23, the Gross margin of the group was 70.0% against 78.9% in H1 FY22, and the EBITDA margin of DLN slipped to 56.0% in the same period (H1 FY23) against 64.8% in pcp. Also, the company reported a negative margin of (107.4%) in H1 FY23 as compared to the positive net margin of 110.6% in H1 FY222.
• Expensive Valuation: The stock of DLN is currently offered at 16.5x on EV/ Sales based relative valuation (NTM) as compared to the industry (Residential & Commercial REITs) median of 11.3x. On Price/Earnings-based relative valuation (NTM), the stock is valued at 18.7x which is higher than the industry median of 14.8x.

Share Price Chart

Conclusion

Due to the current macroeconomic condition, higher interest rates, poor sentiments, and considering the outflows and technical chart pattern, a "WATCH" recommendation on Derwent London PLC (LSE: DLN) has been given at the current market price of GBX 2,034.00 (as of 06 November 2023, 08:30 AM GMT).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 06 November 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 4: Dividend Yield may vary as per the stock price movement.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.