In the past, when Daejan’s (LSE:DJAN) share price to shareholders’ equity (NAV) ratio fell below 0.6 the subsequent five years gave shareholders a return averaging over 100%. Today Daejan’s shares stand on a ratio of merely £52.90/£120 = 0.44.
The make-up of shareholders’ equity
Daejan’s balance sheet is really simple: it holds about £2.6bn of property assets against which it has borrowed £0.5bn. It also has £0.1bn or so in cash and a similar amount in receivables, which is offset by payables.
The company accountants acknowledge that the company will eventually have to pay around £0.3bn in taxes for things like unrealised gains when, eventually the assets are liquidated (deferred taxes).
Market capitalisation is 16.3m shares x £52.3 = £852m.
£m | Sept 2019 | Mar 2019 | Mar 2018 | |||
Investment property | 2,552 | 2,533 | 2,373 | |||
Receivables | 72 | 67 | 63 | |||
Cash | 156 | 96 | 99 | |||
Properties held for sale | 70 | 71 | 0 | |||
Total assets | 2,850 | 2767 | 2,535 | |||
Loans and borrowings | -502 | -431 | -351 | |||
Deferred tax | -291 | -293 | -272 | |||
Payables | -65 | -59 | -52 | |||
Current tax | -38 | -43 | -47 | |||
Equity attributable to shareholders (Net asset value) | 1,953 | 1,941 | 1,813 | |||
NAV per share | £119.85 | £119.07 | £111.25p | |||
Share price (rough average over year) | £52.90 | £54 | £59 | |||
Share price/NAV | 0.44 | 0.45 | 0.53 |
We can now look at the relationship between NAV and share price over two decades.
NAV per share, £ | Share price over year, £ (rough average) | Share price/NAV | Share price change over subsequent five years, % | |||||
2000 | 22 | 10 | 0.45 | 220 | ||||
2001 | 23 | 13 | 0.57 | 300 | ||||
2002 | 27 | 15 | 0.56 | 166 | ||||
2003 | 29 | 15 | 0.52 | 66 | ||||
2004 | 31 | 25 |
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