2016 – The Great Irish Share Valuation Project (Part III)

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C&C Group, Clontarf Energy, Conroy Gold & Natural Resources, DCC, Falcon Oil & Gas, Grafton Group, ICON, Irish Continental Group, Irish Residential Properties REIT, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Karelian Diamond Resources, TGISVP, The Great Irish Share Valuation Project

Continued from here:

Company:   Irish Residential Properties REIT   (IRES:ID)

Last TGISVP Post:   Here

Market Cap:   EUR 465 Million

Price:   EUR 1.115

Back in 2014, I was lukewarm towards IRES – it seemed cobbled together, and commercial property appeared to offer more obvious gains & investor interest. But since then, the Irish media (& in turn, certain politicians) have become increasingly hysterical about foreclosures, evictions*, mortgage rates, and the general housing crisis**. [*Apparently, a landlord deciding not to renew a lease is now deemed an eviction by some… **For overseas readers, it may be hard to keep up: The housing crisis no longer refers to the huge Irish price collapse…it’s now an appalling shortage of housing, just a few years later!?] We’ve also seen widespread criticism of the Central Bank’s new mortgage regulations…generally by the same people who criticised the Bank for its lack of regulation in the boom years!

Ironically, all this attention is fueling a continued rise in residential property prices (exacerbating the very housing ‘crisis’ they’re wringing their hands over!). Just as importantly, it’s re-directed investor interest – IRES is now the highest rated Irish property stock, in terms of premium to book. It’s certainly a unique story: IRES is already the dominant professional residential landlord* in Ireland, focusing on Dublin apartments, which perfectly captures an ongoing generational shift (as we’ve seen in the US) towards urban living, delayed marriage & kids, and an increasing preference to rent vs. own. [*Plus the only landlord with experience of N American apartment amenities & management – which offers interesting potential in what is still a relatively unsophisticated market].

Unfortunately, IRES hasn’t lived up to the promise of its prospectus. Touting gross rental yields of 8.6-10% & net yields of 6-7% was sheer fantasy…and a promised 4.5-5% dividend yield now looks problematic. As of the latest trading update, IRES has now assembled a (relatively new) 2,000+ apartment portfolio (costing €519 million & boasting 97% occupancy), with an LTV ratio of just 23% & an additional €200 million of investment/development capacity. However, the gross portfolio yield is now 6.2%, while the net’s just 5.0%…which is actually flattered by a significant portion of the portfolio being located in West/Southwest Dublin (i.e. Inchicore/Tallaght direction), which tends to offer higher rental yields but less potential for capital appreciation (vs. South Dublin, for example). But overall, the scope for capital gains seems compelling, noting particularly the recent 10-15% pa rent increases (albeit, interrupted by the recent heavy-handed two year rent freeze), though obviously this should already be reflected within the IRES portfolio valuation/yield & investors’ total return expectations – a 1.0 Price/Book ratio still seems appropriate:

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2014 – The Great Irish Share Valuation Project (Final – Part X)

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Aer Lingus Group, Dalata Hotel Group, Donegal Investment Group, Escher Group Holdings, Irish Residential Properties REIT, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Karelian Diamond Resources, Mainstay Medical International, TGISVP, The Great Irish Share Valuation Project, TVC Holdings, Zamano

Continued from here:

[NB: Worth revisiting Part I if you’re a new reader, or you’d like a refresher on TGISVP & my approach to the whole project.]

OK, it’s the final furlong..! This should be my last TGISVP post – that will make it a grand total of 80 Irish companies, all covered in very random order since February. Except this last post – I deliberately withheld DCP:ID & ZMNO:ID ’til I got around to posting separate write-ups for each, plus I’ve only just added another 3 (recent) Irish IPOs. I also debated including 3 other vaguely ‘Irish’ stocks, but decided (somewhat arbitrarily) against them in the end…

[FYI, my 3 rejections were:

– Kennady Diamonds (KDI:CN):   Dermot Desmond has long been involved here – he currently owns a 17.5% stake & the Chairman Jonathan Comerford’s actually an investment manager with IIU. However, the company has no other Irish connections, and I’ve never noticed any kind of Irish PI/institutional following for the stock.

– Kennedy Wilson Europe Real Estate (KWE:LN):   KWE’s a new fund launched by Kennedy-Wilson Holdings (KW:US), focused on investing primarily in real estate & real estate loans in the UK, Ireland & Spain. While the fund’s already completed a chunky Irish acquisition, one would expect Irish assets will ultimately be the smallest component of the portfolio (considering the relative size of the UK/Spanish economies & property markets).

– Metro Baltic Horizons (MET:LN):  MET’s another of those funds launched back in 2006 – focused on property development in the Baltic States & St. Petersburg, and targeting a minimum 25% IRR. Aaah, those were the days, eh..?! Garrett Kelleher & Dermot Desmond/IIU (again!) originally backed the company (with a 27% stake between them), and after some farcical/fraudulent events along the way, the board’s now comprised of a senior IIU executive & two other Irish directors. MET has become a cash/litigation shell & a suspension of its listing’s now imminent – but we should hopefully see some new proposals (inc. a continuation of MET’s listing) from the board shortly.]

So, without any further ado – let’s dive right in & finish up:

TGISVP – 2013 Portfolio Performance

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Alpha Portfolio, Beta Portfolio, Great Western Mining Corp, Independent News & Media, Irish shares, Irish value investing, ISEQ, Karelian Diamond Resources, Papua Mining, portfolio allocation, portfolio performance, Prime Active Capital, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

OK, a second year of The Great Irish Share Valuation Project is now complete – for reference, here’s my mid-year review, now it’s time for the real post-mortem!  Let’s take care of a little housekeeping first:

– Between Jan & May last year, I published individual reviews/valuations for 73 different Irish companies, and kept a file recording each share price (at time of evaluation) & price target to properly assess performance.

– Post mid-year, in Aug-Sep 2013, I published (& recorded) some additional reviews/valuations for 3 new Irish IPOs:  Green REIT (GRN:ID), Keywords Studios (KWS:LN), and Ardmore Shipping (ASC:US).

– Since mid-year, I’ve made no other changes to my TGISVP file, except: i) Donegal Creameries (DCP:ID) changed its name to Donegal Investment Group (DCP:ID), while United Drug (UDG:LN) became UDG Healthcare (UDG:LN), ii) Kedco (KED:LN) changed its name to REACT Energy (REAC:LN), and also consolidated its shares on a 1-for-50 basis, iii) Grafton Group (GFTU:LN) migrated to a London-only listing, iv) Elan Corp (ELN:US) was acquired by Perrigo Co (PRGO:US), and finally v) TVC Holdings (TVCH:ID) paid its shareholders a EUR 0.495 special dividend.

– Since the (major) review/valuation phase was spread over 4 1/2 mths, my benchmark (the ISEQ) needs to be adjusted accordingly. I’m going to reference the mid-point (in terms of companies valued) of this phase – i.e. Feb-25th – as the most appropriate start date for the index.

2013 – The Great Irish Share Valuation Project (Part VI)

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Bank of Ireland, Grafton Group, Great Western Mining Corp, Irish shares, Irish value investing, Karelian Diamond Resources, Kentz Corp, Risk Weighted Assets, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, USA Graphite Inc.

Continued from here.

Company:   Karelian Diamond Resources

Prior Post:   Here

Ticker:   KDR:LN

Price:   GBP 0.525p

Seriously, is this a company, or a joke?! It’s literally held together with spit & baling twine… I shouldn’t be surprised: It’s another Dick Conroy vehicle, and he runs it as tightly as John Teeling does his companies. The company had a mere EUR 10 K on hand at end-May 2012 (no results since!?), EUR 1.0 mio in loans, and EUR 0.8 mio in accrued director compensation. And it goes without saying the company has nothing tangible (in terms of reserves & resources) to show for its exploration efforts…

TGISVP – H1 2012 Performance – Firing On all Cylinders!

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Aer Lingus, AGI Therapeutics, Alpha Portfolio, Beta Portfolio, Botswana Diamonds, Cove Energy, Datalex, ISEQ, Karelian Diamond Resources, market-neutral, natural resource stocks, Ovoca Gold, Petroneft Resources, portfolio performance, Prime Active Capital, Providence Resources, Readymix, Risk Arbitrage, Siteser, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, Worldspreads

Now H1 2012 is over, it’s time to revisit The Great Irish Share Valuation Project. Here’s my Q1 2012 performance post – well worth revisiting as background, but I’ll recap some important points below.

Let’s first look at individual stocks. I count 4 de-listings (which I’ll continue to include for performance purposes, at their final values): AGI Therapeutics (AGI:ID/LN) was a profitable Event-Driven investment for me, and inspiration for some detailed Risk Arb. posts. Siteserv (SSV:ID/LN) & Worldspreads (WSPR:LN/ID) both exited amid scandal – possibly criminal in the case of the latter, with alleged charges now including share price manipulation, in addition to accounting/actual fraud. Finally, Readymix (RYX:ID) succumbed to a Cemex (CX:US) bid, illustrating that the right investment thesis (an eventual takeout by the controlling shareholder) is not enough. Timing & the price you pay are equally important – despite the bid premium, RYX’s multi-year operational & price decline meant v few long term shareholders made any profit. Looking ahead, Cove Energy (COV:LN) seems set to follow the de-listers, but promises to provide some final drama!

The Great Irish Share Valuation Project III

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Allied Irish Banks, Bank of Ireland, First Derivatives, ICON, IFG Group, Independent News & Media, Irish Life & Permanent, ISEQ 20 ETF, Karelian Diamond Resources, Kenmare Resources, Kerry Group, singing dancing duck, Wile E. Coyote

Continued from here:

Right, let’s work our way through another batch of 10 stock valuations. As usual, I’ve updated market prices (and any relevant FX rates) for all stocks covered to date, so remember that each new file published will be a dynamic snapshot of each stock’s upside/downside potential:

The Great Irish Share Valuation Project III     (xlsx file)

The Great Irish Share Valuation Project III     (xls file)

ICON (ICLR:US):   ICON’s at a very interesting point right now. In 2009, they pretty much hit the wall, probably a reflection of the mid-life crisis that most of the major pharma companies are suffering right now. This is a pattern I’ve seen before – and forget to check up on nearly every bloody time (and, of course, it’s far easier to spot with hindsight!):