Buy: Warehouse Tax Refund (WHR)

The completion price of the new lease is 9% higher than the estimated rental price, and the funds raised for the new assets are less than £200 million. Emma Powell wrote.

Any sub-sector of British real estate is more popular than logistics. According to the trend, Warehouse Reit announced the result that the total accounting return rate for the 12 months to the end of March was 28%, far exceeding the annual target of 10%. In addition to huge dividends, the value of the industrial asset portfolio has increased by nearly one-fifth year-on-year.

The real estate investment trust fund raised nearly 200 million pounds of total proceeds for the acquisition in 12 months, but shareholders may forgive the dilution of their shareholding. Due to the acceleration of e-commerce, Warehouse Reit has shown its strong ability to obtain substantial returns from high-demand assets.

It has completed the lease of 54 leased vacancies, an average of 9.2% higher than the estimated rental value. The ERV of the entire portfolio increased by 3.7% year-on-year.

“[There is] According to Andrew Bird, managing director of Tilstone Partners, Ruitai Investment Consultants, “This is definitely to make residents more aware of the limited available space.” Bird said that the landlord not only agreed to rent at higher rents. , And more and more deals are signed for 10-year periods, which is higher than the usual 5-year period.

Housing broker Peel Hunt (Peel Hunt) raised its predicted net asset value at the end of March 2022 by 7% to 144p per share. In the past 12 months, the stock price has risen by nearly 30% as investors have been attracted by generous offers. In February, the Real Estate Investment Trust announced its intention to list on the main market later this year, which may further expand the scope of shareholder registration. Although the stock price is still a little lower than the predicted net asset value per share, it is still a buy.

Sold: Marks and Spencer (MKS)

During the pandemic, M&S’s shrinking apparel business was hit harder because management needed to overhaul its tired brand. Oliver Telling wrote.

Marks and Spencer knows the value of its food business. Last month, the company announced that it would take German rival Aldi to court all the way to protect its copyright. Caterpillar Cake Colin.

The retailer’s latest performance highlights its growing need to build a competitive moat around the food aisle. Marks and Spencer said that in the year ending in March this year, food sales in the UK accounted for almost two-thirds of its total revenue, compared with 59% in the same period last year.

However, due to the coronavirus pandemic hitting demand for its clothing and household products, the M&S supermarket business was not resilient enough to support its turnover, which fell 12% to 8.9 billion pounds. The change from a pre-tax profit of £67.2 million in the previous year to a loss of £201 million was mainly due to the increasing reliance on traditional food sales with lower profit margins.

Pedigree Turn red It is not only the result of the decline in income, but also the special expenses totalling 260 million pounds. As the management began to make drastic changes to the business, this was largely related to store closures and layoffs at headquarters.

In the short term, as consumers reduce their consumption of fashion during the lock-in period, M&S’s dependence on supermarket business has further increased. However, even before the pandemic, the proportion of apparel product sales is still declining. In the year ended March 2018, 35% of income came from clothing and households; since then, food sales have been devouring more M&S cakes every year.

Although M&S has found a niche market that provides high-end meals to the middle class, its fashion collections have been struggling to remain competitive. Once a symbol of British quality, it is now catching up with companies like Next (Next), which have quickly adapted to the rise of e-commerce and demanded that fashion be faster and more fashionable.

M&S’s apparel business may continue to shrink, unless the ongoing restructuring can make it popular again. Investment is focusing on e-commerce activities-it said it has closed or relocated 83 stores, and now plans to close 30 stores. Online marketing will match an early update of the food operation, which joined the online grocer Ocado in 2019; the partnership has brought M&S ??£2.4 billion in revenue in the 12 months ending in February.

With the help of online shifts during the pandemic, M&S’s online growth accelerated this year, partially offsetting the decline in store sales. However, according to market consensus forecasts, even with comprehensive reforms, analysts still do not expect earnings per share to return to pre-pandemic levels by 2024.

The slogan of the M&S overhaul strategy-not the same anymore-seems to highlight management’s recognition of the company’s below-standard performance in recent years. Satisfactory online operations have been around for a long time, but filling the website with clothes that shoppers actually want to click and buy can be the most difficult step. Investors should wait for more positive signs.

Owner: Ted Baker (TED)

Ted Baker extended Revolving credit line It has been reduced for more than a year, although the total amount of funds available to its creditors has been reduced, Oliver Telling wrote.

The high-street retailer previously had a £25 million “restricted” revolving credit facility (RCF), which expires in January 2022, and an additional £108 million credit line until September of that year. However, according to a new agreement with the lender, these fees will be replaced by an RCF of 90 million pounds, which will be reduced to 80 million pounds in January 2022 until expiration in November 2023.

Coupled with a net cash position of 66.7 million pounds at the end of January this year, Ted Baker said that the new arrangement with creditors will ensure that it has sufficient cash and liquidity to complete its transformation plan. It added that the transaction included amendments to the covenant test related to its adjusted cash profit (Ebitda) performance, which would provide it with “further financial flexibility”.

Ted Baker has already begun to change its business before the Covid-19 pandemic. This includes increasing its online attention and increasing the turnover of its stocks in an effort to keep up with the rise of e-commerce and fast fashion. The reorganization was led by the new CEO Rachel Osborne, who was appointed as an agent in December 2019 and then took office permanently in March last year.

However, the high street shutdown during the Covid crisis dealt a major blow to Ted Baker’s plan. In reporting the performance for the six months ended August 8, the company stated that it had decided to send 38 tons of “terminal inventory” to charity organizations. Due to reduced sales and 48.1 million pounds of impairment charges, the statutory pre-tax loss has almost quadrupled year-on-year to 86.4 million pounds.

Since the outbreak of the pandemic, many investors have lost confidence in the retailer-the stock price has fallen by nearly 15%. After the company announced that it would postpone the release of its full-year results for more than a week on June 10, it once again attracted people’s attention. The company blamed it on the interruption of the audit process caused by Covid-19.

Ted Baker still stated that earnings for the year ending January 30 will be in line with market expectations. FactSet predicts that the consensus of analysts is that pre-tax losses will be reduced from 79.9 million pounds to 35 million pounds. The digital transformation is welcome and overdue, but investors should keep in mind that it may take some time to complete.

Chris Dillow: Threat ratings for emerging markets

Investors in Emerging Markets Investors must beware of being misled by their early growth experience.

During 1994-95, rising interest rates in the United States triggered a sharp drop in emerging markets. Since then, many investors have been worried that the Fed’s tightening policy is terrible for emerging market stocks. As interest rates are more likely to rise, investors can worry and be forgiven.

Although this experience is vaguely visible in our minds, it is not typical. In fact, since 1991, there has actually been a slight positive correlation between the annual changes in the federal funds rate and the MSCI Emerging Markets Index, which means that higher interest rates are often accompanied by considerable returns on these stocks. For example, they performed well when interest rates rose in 2005 and 2016-17. Many declines in emerging markets occurred without any help from the Federal Reserve, such as in 1998, 2001-02, and 2015.

There are good reasons why emerging markets need not worry that the United States will raise interest rates. The Fed usually warns us of its intention to raise interest rates in advance, so the market should set a price before the rate hike occurs. The Fed only raises interest rates when it is convinced that the US economy is strong enough to withstand interest rates. But under these circumstances, investors’ risk appetite is rising, which is good news for emerging markets.

In fact, recent history tells us that as far as the threat of US interests to emerging markets is concerned, it is in the opposite direction. The expectation of lower interest rates is not good for them.

There is a strong positive correlation between the return of emerging market shares and the change in the 10-year U.S. Treasury bond yield. Falling yields such as 2002-3, 2008-09, 2011-12, and 2020 indicate that emerging markets have fallen, while yields such as 2006, 2009-10, and 2016-17 have risen and they have performed well. Only in 2013 and 2019 did this model disintegrate.

This is because the decline in yields (which usually occurs when the world economy is expected to be weak) is a sign of a decline in investor risk appetite-and emerging markets are particularly risky assets, and they are very sensitive to such declines.

If the federal funds rate rises and bond yields rise, then emerging markets should perform well. It is not that higher yields motivate them to do so, but because the environment of rising yields is a good condition for the industry.

Does this mean that investors in emerging markets can safely ignore the threat of high interest rates?

Not completely.

One of the dangers is that raising interest rates may increase the value of the U.S. dollar. This will hurt emerging markets because the appreciation of the U.S. dollar will increase the cost of raw materials and repay debt denominated in U.S. dollars.

The second danger is that if investors are worried that higher interest rates will severely weaken the world economy, they usually abandon risky assets.

However, these two threats are mutually exclusive to some extent. If the U.S. economy appears to remain strong, the U.S. dollar is most likely to rise due to rising interest rates. In this case, the demand for risky assets will remain high.

However, there is a third danger. Our long-term close to zero interest rates may have broken the historical link between interest rate changes and emerging markets. Investors may not buy risky assets because of their actual value, but disillusioned because of the lack of cash returns. To a certain extent, raising interest rates will cause emerging markets to fall as investors transfer funds back to cash.

Sadly, we don’t know the extent of the yield, and if interest rates only rise slightly, whether the yield will reverse.it is possible used to have some, But it may be more important in the riskier bond market (yield provided) than in the stock market.

So yes, a higher federal funds rate is a danger to emerging markets. But this is a secondary threat. The greater danger is the loss of appetite for the risks caused by the threat of economic recession or financial crisis. Such losses are of course inevitable at certain times, but this does not mean that they are imminent.

Chris Dillow is an economics commentator for “Investor Chronicle”