Watkin Jones plc
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Description
The UK’s leading developer and manager in the residential rental market, focused on student accommodation and the more emerging build-to-rent (BTR) market. Its development model is largely pre-funded by institutional investors, with many of whom it has strong relationships. It also manages student and BTR properties for institutions and has a profitable housebuilding division.
Our view
The company combines long-term growth opportunities in a low-risk, capital-light model. It is cash-positive, developments are forward-funded and the accommodation management division has a strong element of recurring income. Moreover, we believe the economic fall-out from Covid-19 could present land buying opportunities.
Recent Research
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Financial Summary
Year end: September (£m unless shown)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Revenue | 363.1 | 374.8 | 354.1 | 459.5 | 531.9 |
| Fully Adj PBT | 50.1 | 50.4 | 45.8 | 50.0 | 55.1 |
| Fully Adj EPS (p) | 16.0 | 16.1 | 14.7 | 15.8 | 17.4 |
| Dividend per share (p) | 7.6 | 8.4 | 7.4 | 8.0 | 8.7 |
Profit & Loss
Year end: September (£m unless shown)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Revenue | 363.1 | 374.8 | 354.1 | 459.5 | 531.9 |
| Adj EBITDA | 50.9 | 64.8 | 61.1 | 64.0 | 69.7 |
| Adj EBIT | 49.6 | 55.6 | 51.7 | 54.8 | 59.9 |
| Reported PBT | 54.3 | 47.9 | 25.3 | 50.0 | 55.1 |
| Fully Adj PBT | 50.1 | 50.4 | 45.8 | 50.0 | 55.1 |
| NOPAT | 40.7 | 41.1 | 37.6 | 40.5 | 44.7 |
| Reported EPS (p) | 17.3 | 15.2 | 8.2 | 15.8 | 17.4 |
| Fully Adj EPS (p) | 16.0 | 16.1 | 14.7 | 15.8 | 17.4 |
| Dividend per share (p) | 7.6 | 8.4 | 7.4 | 8.0 | 8.7 |
Cash Flow & Balance Sheet
Year end: September (£m unless shown)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Operating cash flow | 66.6 | 38.9 | 54.9 | 29.0 | 35.0 |
| Free Cash flow | 54.1 | 23.8 | 38.0 | 14.3 | 19.3 |
| FCF per share (p) | 21.2 | 9.3 | 14.9 | 5.6 | 7.5 |
| Acquisitions | 3.0 | 0.2 | 0.8 | 0.0 | 0.0 |
| Net cash flow | 41.3 | 9.0 | 18.9 | (11.2) | (1.8) |
| Overdrafts / borrowings | 26.5 | 176.3 | 174.1 | 174.1 | 174.1 |
| Cash & equivalents | 106.6 | 115.7 | 134.5 | 123.3 | 121.5 |
| Net (Debt)/Cash, pre-IFRS 16 | 80.2 | 88.4 | 94.8 | 85.2 | 83.3 |
| IFRS 16 Lease liabilities | (149.0) | (134.5) | (136.0) | (136.0) | |
| Net (Debt)/Cash post-IFRS 16 | (60.7) | (39.6) | (50.8) | (52.7) |
Nav & Returns
Year end: September (£m unless shown)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Net asset value | 153.0 | 161.1 | 167.9 | 182.8 | 206.3 |
| NAV/share (p) | |||||
| Net Tangible Asset Value | 138.6 | 147.3 | 154.6 | 170.1 | 194.1 |
| NTAV/share (p) | |||||
| Average equity | 114.5 | 139.6 | 157.1 | 164.5 | 175.3 |
| Post-tax ROE (%) | 38.6% | 27.8% | 13.4% | 24.6% | 25.5% |
Metrics
Year end: September (£m unless shown)
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Revenue growth | 9.3% | 3.2% | (5.5%) | 29.8% | 15.7% |
| Adj EBITDA growth | 6.7% | 27.2% | (5.7%) | 4.7% | 9.0% |
| Adj EBIT growth | 16.7% | 12.1% | (7.1%) | 6.1% | 9.4% |
| Adj PBT growth | 11.2% | 0.8% | (9.3%) | 9.3% | 10.3% |
| Adj EPS growth | NA | 0.7% | (8.5%) | 7.6% | 10.2% |
| Dividend growth | NA | 9.9% | (12.0%) | 8.8% | 8.8% |
| Adj EBIT margins | 13.7% | 14.8% | 14.6% | 11.9% | 11.3% |