Will Results Help Intu Properties Recover From Retail Woes?
Spreadex | Jul 20, 2018 11:01
Having shot up at the end of 2017 on news that rival Hammerson was merging with the company in a deal worth £3.4 billion, Intu’s 2018 has been one of prolonged disappointment. Immediately tumbling from a starting price of £2.55, decent full year figures in February couldn’t prevent the stock from seeing a long-decline, exacerbated in mid-April by the news that Hammerson wouldn’t be proceeding with the merger after all.
Since then the company has continued to struggle, with a ratings downgrade from Deutsche Bank (DE:DBKGn) in mid-July contributing to its losses, forcing it to an all-time low of £1.75. Intu Properties (LON:INTUP) now sits at a current trading price of £1.80.
The day before Hammerson (LON:HMSO) put the final nail in the M&A coffin, Intu actually released a solid first quarter trading statement. Occupancy was up from 95.8% in March 2017 to 96.1%, while footfall for the year-to-date rose 1.5%, though that number excluded the ‘Beast from the East’-blighted period that was so troublesome for the UK retail sector.
And while the various problems at tenants like New Look, Toys R Us and Prezzo are set cost around £3.9 million, equivalent to 0.8% of its 2017 net rental income, Intu is still expecting like-for-like growth of between 1.5% and 2.5% for 2018. It also said it would be opening its £180 million Intu Watford extension later this year, with a £72 million leisure extension at Lakeside in 2019.
Investors have not been a fan of Intu this year. Its interim results, then, need to reassure the market that it doesn’t need to Hammerson deal to succeed, ideally with signs that its like-for-like net rental income growth will be at the upper end of its previous guidance.
Intu Properties PLC (LON:INTUP) has a consensus rating of ‘Hold’ alongside an average target price of £2.16.
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