Business Overview
The company operates in real estate through its regional offices and joint ventures. The company manages schemes through the planning process, remediating brownfield land and active asset management and development. It engages in the regeneration and development of commercial property and residential estate. Its development activities include industrial, retail, student accommodation and office projects.

Recent News
On 9^th December 2019, the company announced that it would declare its financial year 2019 results on 4^th February 2020. The company fiscal year 2019 ended on 30 November 2019.

Trading Statement FY 2019 (30^th November 2019)
The company’s sales volumes increased by 25% to 1,060 units. Operating margins of the company have improved, and the company expects to make further progress towards its 16-17% medium-term target during 2020. The company’s forward order book grew by 33% as compared to the same period of the last year. The company’s pipeline improved to 1.6m square ft. The company has done well in its leasing business. 53% of the ERV is already let or under offer completed during this year, grew from 39% as compared to the last year data.

Financial Highlights – H1 Financial year 2019 (31^st May 2019, GBP, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s NAV per share increased by 1.3 per cent to 476.4p and EPRA NAV per share increased by 1.8 per cent to 492.5p. It was due to an increase in volumes of housebuilding. The company’s profit for the half-year grew by 11.1 per cent to GBP 23.1 million due to an increase in housebuilding volumes and industrial and logistics development activity. The company declared 3.6p of dividend per share for the first half of the financial year 2019.

Share Price Performance  

Daily Chart as on 12^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 12^th, 2019, St. Modwen Properties Plc shares were trading at GBX 455 at the time of writing before the market close, down by 1.73 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 479/GBX 370. The stock has given a 19 per cent return in the last year, and now some correction in the stock price is expected.

Valuation Methodology

*Peers: Londonmetric Property Plc, Great Portland Estates Plc, Assura Plc, Big Yellow Group Plc and British Land Company Plc

Conclusion
The company has improved its financial as well as operational performance during the first half of the fiscal year 2019. The company has shownsteady growthin its St. Modwen Homes and Industrial & Logistics business. The overall performance of the business has been in line with the expectations. However, the external environment remains uncertain, and the UK property market continues to be challenging. Brexit uncertainty could impact the operations of the company. Failure to effectively manage major projectscould result in a loss in the profitability of the company.  Reduced availability of funding and liquidity could hamper the operations of the company. Failure to manage long-term environmental issues, climate change issue could affect the overall business of the company.

Based on the valuation and factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 455 (as on 11^th December 2019, after the market close), with support from new catalysts needs to be evaluated at a later stage.  
 
*All forecasted figures and information have been taken from Thomson Reuters. 

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