Directors’ Deals: Segro chair increases his stake

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Segro’s chair has upped his stake in the FTSE 100 warehouse landlord by over a fifth after it swung to a loss in its interim results at the end of last month. Andy Harrison, appointed chair in April 2022, bought £795,000-worth of shares on July 31. Shares have flatlined this year and remain around 50 per cent lower than their 2021 peak.

Harrison’s purchase at a 17 per cent discount to Segro’s net asset value per share brings his total stake in the company to £4.17mn, 0.05 per cent of the company’s issued share capital, having built up the holdings over a handful of large transactions since his appointment.

The news comes after Segro swung to a £33mn pre-tax loss for the six months to June 30, compared with a £1.4bn profit last year, due to higher interest rates walloping the value of its assets. However, the company was bullish about the future, pointing to its 10.3 per cent bump in net rental income — rental income less the costs of running the building but before valuation changes.

Other warehouse landlords are also confident about prospects for the sector again, as it tries to regain its footing after rising rates and fears of overcapacity silenced its pandemic-era boom. Tritax Big Box chief executive Colin Godfrey said this month that “it looks like the market has bottomed out” after the company posted a £29.9mn increase in its portfolio value. Like Segro, Tritax took a big valuation hit last year when the disastrous “mini” Budget sent implied interest rates soaring. 

Agency JLL said that tenant demand for warehouses in the first half of this year had slumped from last year’s highs but was still “around the pre-Covid average”. It added that prime warehouse rents were up 9.5 per cent year on year and that the current amount of stock available to let amounted to “less than two years of supply based on recent demand”.

Coats directors buy in 

Industrial thread and footwear components business Coats is going through a period of cost-cutting as it tries to grow its market share and protect margins. 

The company’s latest results, released on August 1 and covering the half-year to June 30, were set “against a strong prior year comparator and the backdrop of widespread industry destocking”, in the words of chief executive Rajiv Sharma. This was evident in the drops in revenue and pre-tax profits, down by 11 per cent and 39 per cent respectively, in the period. 

Guidance is for overall project savings of $70mn (£55mn) by 2024, with $21mn booked in the first half of 2023. This will assist Coats in hitting its adjusted operating margin target of 17 per cent next year — the figure currently sits at 15 per cent. 

The company expects market demand to improve in the second half of the year, although it now thinks full-year trading will come in at the lower-end of the consensus analyst forecast range. Chair David Gosnell and non-executive director Stephen Murray are clearly confident on the outlook for the share price, based on their buying activity in early August. Gosnell bought £108,000-worth of shares on 3 August, while Murray picked up £47,000-worth of shares the following day. 

A forward price/earnings rating of 10 times is an attractive discount to the five-year average of 13 times, according to consensus analyst positions on data provider FactSet. As we noted in our analysis of the half-year results, “growth is not going to be remarkable . . . but Coats is well placed in its market and not overly expensive.”