Numis reiterates 'buy' rating on St Modwen Properties

Numis reiterated a ‘buy’ rating and target price of 535p on St Modwen Properties after the property company said trading for the year had started well.

In a pre-close statement for the period 1 December 2015 to 31 May 2016, St Modwen said it continued to add new opportunities to its commercial development pipeline, which stood at 1.7m sq ft and comprised a variety of uses in those regions where there was good evidence of occupier take up.

Chief executive Bill Oliver said the regional portfolio, commercial development pipeline and housebuilding activities continue to produce opportunities for growth in group net asset value “which we expect to demonstrate at both the half year and the full year 2016, leading to long-term value creation for our shareholders”.

He said the housebuilding area of the business remains profitable, reflecting strong demand in the UK.

The procurement of the market at New Covent Garden Market is now underway, St Modwen said, with vacant possession of the 10 acre Nine Elms Square site anticipated for spring 2017.

The company reaffirmed that it intended to either sell, joint venture or develop the site during 2016.

“St Modwen's trading update highlights that it is making strong underlying progress across all areas of the business,” Numis said in a note.

“Whilst the impact from the changes to stamp duty and any change to the valuation of New Covent Garden Market site will not be known until the half year stage, we take comfort from the statement that management expect ‘NAV to grow at both the half and full year 2016’.”

Shares fell 0.49% to 327.40p at 1309 BST.