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Daejan – Shareholders’ equity versus share price

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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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