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The £1bn EPRA NDV target has been pushed back, but the new target still implies strong future growth. With the shares trading on a 34% discount to 2026E EPRA NDV, we retain our Buy rating, with a reduced TP of 200p.
Harworth Group PLC
HWG’s FY25 trading update highlights continued momentum across the Industrial & Logistics (I&L) portfolio, with attractive property returns, leasing progress and quality uplifts offsetting macro driven headwinds in residential. Total plot sales and disposals in FY25 reached £110.2m, in line with previous disclosures, while management guided for FY25 EPRA NDV is expected to be flat to marginally up versus the half year. However, the Group has formally pushed back its £1bn EPRA NDV target by ~18 months to a range between FY28 and FY29 (from FY27 previously), citing ongoing macroeconomic uncertainty and weaker investor sentiment. The shares continue to trade at an 37% discount to our two year forecasts. Based on revised guidance, we still expect an over 10% CAGR total return justifying a tighter discount. {!Attachments(>> Click here to continue reading)} Summary financials & valuation (£m) Calendar year Valuation (CY) 24A 25E 26E 27E P/E (x) (23.4) (28.7) (29.0) (28.4) Div Yield (%) 1.0 1.1 1.2 1.3 EV/Sales (x) 27.2 22.4 21.6 21.3 EV/EBITDA (x) (37.4) (38.7) (40.7) (41.5) EV/EBIT (x) (36.4) (38.7) (40.7) (41.5) FCFe Yield (%) 0.3 (1.8) (2.0) (2.1) Financial year (December year end) Financials (FY) 24A 25E 26E 27E Sales 21 26 27 28 EBITDA (15.6) (14.8) (14.2) (14.2) EBIT (16.0) (14.8) (14.2) (14.2) EBIT Margin (%) (74.6) (57.8) (53.0) (51.4) Net Interest (6.7) (3.8) (4.2) (4.6) PBT (22.8) (18.6) (18.4) (18.8) FD EPS (p) (7.0) (5.7) (5.7) (5.8) DPS (p) 1.6 1.8 2.0 2.1 NAV per share (p) 229.3 230.3 240.2 279.2 Net Debt/(Cash)* 46.7 34.4 41.3 49.1 NDV per share (p) 222.3 228.1 234.3 262.1 Net Debt/(Cash)** 46.7 34.4 41.3 49.1 Net Debt/EBITDA (x) (3.0) (2.3) (2.9) (3.5) Net Debt/Mkt Cap (x) 0.1 0.1 0.1 0.1 LTV (%) 5.5 4.0 4.6 4.7 Source: Panmure Liberum, Bloomberg All numbers are on a post IFRS 16 basis unless stated. * Including leases. ** Excluding leases
The divergence in performance of the two parts of the business endorses management’s strategy to focus on I&L and, with the shares trading on a c.30% discount to NAV, we believe Harworth continues to look good value.
HWG has announced FY25 sales of £110.2m, including £92.5m in H2, reflecting solid execution despite a subdued market backdrop and delays to transactions following the late November Budget. Total residential plot sales of 1,837 were in line with the four-year average, with a further 746 plots conditionally exchanged and 155 expected to complete imminently. We expect policy clarity following the Budget to improve sentiment. {!Attachments(>> Click here to continue reading)} Summary financials & valuation (£m) Calendar year Valuation (CY) 24A 25E 26E 27E P/E (x) (23.5) (28.8) (29.1) (28.5) Div Yield (%) 1.0 1.1 1.2 1.3 EV/Sales (x) 27.3 22.4 21.6 21.4 EV/EBITDA (x) (37.5) (38.8) (40.8) (41.6) EV/EBIT (x) (36.5) (38.8) (40.8) (41.6) FCFe Yield (%) 0.3 (1.8) (2.0) (2.1) Financial year (December year end) Financials (FY) 24A 25E 26E 27E Sales 21 26 27 28 EBITDA (15.6) (14.8) (14.2) (14.2) EBIT (16.0) (14.8) (14.2) (14.2) EBIT Margin (%) (74.6) (57.8) (53.0) (51.4) Net Interest (6.7) (3.8) (4.2) (4.6) PBT (22.8) (18.6) (18.4) (18.8) FD EPS (p) (7.0) (5.7) (5.7) (5.8) DPS (p) 1.6 1.8 2.0 2.1 NAV per share (p) 229.3 239.4 278.0 340.1 Net Debt/(Cash)* 46.7 34.4 41.3 49.1 Net Debt/(Cash)** 46.7 34.4 41.3 49.1 Net Debt/EBITDA (x) (3.0) (2.3) (2.9) (3.5) Net Debt/Mkt Cap (x) 0.1 0.1 0.1 0.1 LTV (%) 5.5 3.9 4.0 4.0 Source: Panmure Liberum, Bloomberg All numbers are on a post IFRS 16 basis unless stated. * Including leases. ** Excluding leases
Harworth Group plc has completed five Industrial & Logistics lettings totalling 267,000 sq ft since 1 July 2025, delivering £2.5m of annualised rent at an average £9.28 psf, 1.4% ahead of ERV and 12.6% above the H1-2025 Grade A headline rent of £8.24 psf. The most significant transaction is a 169,400 sq ft letting at Droitwich 170 to Uniserve on a 10.25-year term-certain lease, generating £1.6m of annual rent. The unit reached practical completion only in August, underlining strong occupier demand for new Grade A regional logistics space.
Next week James is back . . . but only for one day before he embarks on another overseas trip! To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
Harworth Group PLC Supermarket Income REIT Plc
HWG’s H1’25 results were broadly in line with our run-rate forecasts and previous guidance, with EPRA NDV per share essentially flat, as expected, as residential cost inflation offset strong industrial & logistics (I&L) gains. This “pause” is consistent with management’s flagged investment phase and should give way to a hockey-stick reacceleration in valuation uplifts as key projects mature and crystallise from 2026 onwards. With gross assets already up more than 50% organically since 2020 and visibility increasing across the strategic landbank, we continue to see Harworth delivering sustainable double-digit total accounting returns (TAR). At the current c.23% discount to NDV, we view the shares as materially undervalued.
Despite macroeconomic headwinds, Harworth has delivered a positive 1H25 return, with continued momentum. We remain Buy, with a 210p TP.
Despite today’s modest NAV reductions, our three-year total accounting return forecasts of c.10% per annum are amongst the highest in the sector.
HWG’s H1’25 update underscores the resilience and long-term potential of its strategy, with continued delivery across planning, infrastructure and land enablement despite a challenging macro backdrop. Management reaffirmed their £1bn EPRA NDV target by end ‘27, supported by operational momentum, strategic site control and sustained market interest in key sectors. Plot sales remain strong, with 649 residential plot sales completed (incl. PPAs) and 1,593 plots conditionally exchanged or in legals, while the Group continues to invest in infrastructure to unlock future value, reinforcing our conviction in the back-end weighted growth profile. HWG currently trades at a 22% discount to our estimate of spot EPRA NDV, despite clear visibility on delivery against its strategic targets. We forecast NDV per share to grow at a c.11% CAGR over the next three years.
James reports from a trip to the spiritual home of Britpop, while Matt says “Don’t Look Back in Anger” on a volatile week for the UK. To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
With the shares currently trading at a 23% discount to NAV, we reiterate our Buy rating and 210p TP. This reflects our confidence in Harworth’s ability to sustain double-digit returns over the medium term.
We visited three of Harworth’s strategic sites in the North West – Northern Gateway, Logistics North, and Wingates – which reinforced the group’s ability to deliver large-scale, regeneration-led value. These visits showcased Harworth’s differentiated capability in infrastructure delivery, brownfield remediation, and development structuring – all central to its NDV compounding model.Key takeaways:Northern Gateway is a nationally significant, employment site with 11m sq. ft of potential floor space allocated by the government. Harworth has a 50% JV.Logistics North and Wingates provide proof points for Harworth’s ability to deliver Grade A space in undersupplied regions, with potential reversion >40% in some cases.Occupier demand in the North West is building again, with 3PLs, manufacturers, and retailers driving activity and logistics rental growth of 3–4% pa forecast through 2029.
This week the team focus on regional assets, with updated thoughts on NewRiver REIT and a Manchester/Leeds tour with Schroder REIT. To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
HWG NRR SHC
Harworth’s AGM trading update provides evidence of continued progress in the opening months of 2025. We reiterate Buy, with a 210p target price.
HWG’s latest trading update shows the company is carrying strong momentum into 2025, building on a record year in 2024. Operational progress continues across its priority areas: developing modern industrial and logistics (I&L) assets, unlocking value through land promotion and planning, and monetising its extensive residential landbank at healthy margins. Residential plot sales are off to a strong start from a record year in 2024. Leverage has ticked up as expected—reflecting well-managed deployment of capital ahead of H2-weighted disposals. Despite broader market volatility, Harworth remains firmly on track to meet its strategic targets of £1bn EPRA NDV by end-2027 and £0.9bn of income-producing I&L assets by 2029. The shares continue to trade at a c.30% discount to NDV despite demonstrating sustainable returns well above cost of equity (PanLib: 9%).
An effective £675m sale, at book value, of a 25% share in the iconic Covent Garden estate is this week’s highlight. To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
Harworth Group PLC Shaftesbury Capital PLC
Harworth’s intensive regeneration efforts offer above-average returns from a lowly geared balance sheet. We reiterate our 210p TP and Buy rating with the shares trading on a 27% discount to NAV.
Harworth’s FY’24 results show EPRA NDV increased +8.4% to 222p, slightly ahead estimates and guidance (PanLib: 220p) delivering a total return of +9.1%, in what has been a record year for the company. During FY’24 HWG developed 100k sq. ft of industrial and logistics space and generated headline sales of >£230m. With a remaining pipeline of c.34m sq. ft, the company has sufficient runway achieve its target NDV of £1bn by 2027. The long-term prospects for the residential and industrial/logistics markets remain strong with several schemes in HWG’s portfolio with the potential to deliver accelerating growth in the near-term. HWG is on track to deliver a sustainable ROE >10% (above our estimated cost of equity of 9%), justifying a re-rating above its NDV per share. The shares stand at c.26% discount to spot EPRA NDV, compared to an average c.22% discount for the UK real estate sector. Buy.
A record year and a business model that continues to monetise the significant value inherent in the portfolio. We maintain our Buy rating with a target price of 210p.
Harworth’s trading statement guides that FY’24 EPRA NDV will be in line with current consensus forecasts (consensus: 220p, PanLib: 220p +7% y/y), marking a record year for the company. HWG has developed >100k sq. ft of industrial and logistics space in 2024 and generated headline land sales of >£230m. With a remaining pipeline of 33.6m sq. ft and 31.2k homes, the company has sufficient runway to progress toward its target NDV of £1bn by 2027. In our view, HWG is on track to deliver a sustainable ROE >10% (above our estimated cost of equity of 9%), justifying a re-rating above its NDV per share. The shares stand at c.26% discount to spot EPRA NDV, compared to an average c.30% discount for the UK real estate sector. Buy
Dry or otherwise, January is already shaping up to be a difficult month. The team seeks comfort from the encouraging updates from Harworth# and Unite. To listen to the podcast, please click on the image below. #Corporate client of Peel Hunt
Harworth Group PLC UNITE Group plc
Harworth has had a successful 2024 and the shares are up nearly 40% over the past 12 months. Despite this, they continue to look good value on a 28% discount to spot NAV and today we increase our TP to 210p. Reiterate Buy.
Harworth has completed a record 1,896 residential plot sales in Q4’24 taking the total number of plot sales to 2,385 (+104% y/y), generating headline sales of £104.1m (+100% y/y). When combined with the land sales at Skelton Grange and Ansty, HWG has generated land sales of >£210m (c.40% of its market cap) delivering profit on cost which we estimate to be >40%. The update underpins HWG’s capital-light, self-funding model which utilises residential plot sales to fund profitable land promotion and industrial development. In our view, HWG is on track to deliver a sustainable. ROE >10% (above our estimated cost of equity of 9%), justifying a re-rating above its NDV per share.
In the run-up to Christmas, Harworth completed two large and highly profitable land sales, making for ‘a very Merry Christmas’ for the company. The shares trade on a 25% discount to spot NAV. We reiterate our Buy recommendation and TP of 195p.
This week Matt chews over a superb piece of retail warehouse asset management, and James waxes lyrical on a visit to Yorkshire with Harworth#. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
We attended HWG’s capital markets day, visiting the Skelton Grange and Gascoigne Wood sites. Visiting the sites highlighted the suitability of the locations, but equally the specialised capabilities required to remediate sites for optimisation. We note the following key points (i) Management have re-iterated their target investment portfolio of £0.9bn by ’29 (ii) Occupier markets are strong with take-up levels increasing +38% y/y. Demand is for all box sizes and the East Midlands represents 40% of take-up. (iii) the Skelton Grange and Gascoigne Wood sites have clear advantages for their respective uses. In our view the long-term prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.17% discount to EPRA NDV, compared to an average c.14% discount for the UK real estate sector.
HWG has announced the acquisition of a 285k sq. ft Grade A urban logistics estate for £43.7m reflecting a NIY of 5.4% near its flagship development, the Advanced Manufacturing Park (AMP). The scheme is 90% occupied and HWG is confident in securing letting for the remaining 28k sq. ft taking the annualised rental to £2.5m (£8.77/sq.ft). HWG’s comparable lettings are attracting £10/sq. ft, implying potential reversion of 14%. The existing lease agreements are to a diverse range of occupiers, and we believe HWG has leveraged its area knowledge to secure a high growth asset cementing its ambitions (£0.9bn of 100% Grade A investment portfolio by 2029). In our view the long-term prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.18% discount to EPRA NDV, compared to an average c.15% discount for the UK real estate sector.
With Matt out of the office, James runs us through the week’s news, including interim results from Regional REIT# and Harworth#. To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
The shares trade on a 24% discount to our unchanged EPRA NDV forecast, and Harworth remains a top pick given the outlook for returns. We reiterate Buy, TP 195p.
HWG has delivered consistent momentum through the cycle with 145% of budgeted sales for FY24 already completed, exchanged or at heads of terms. During 24H1 EPRA NDV/sh of 212p is ahead of run-rate expectations (FY’24e: 214p) driven by accelerating valuation gains of +£47m (+37% y/y). Underlying property values were up 6.9% with gains largely reflecting management actions which is ahead our run-rate expectation. We increase our 31 Dec’24 to Dec’27 EPRA NDV forecast by +c.3% to 220p, 231p and 246p. In our view the long-term prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.22% discount to EPRA NDV, compared to an average c.11% discount for the UK real estate sector.
The King’s Speech focussed on enabling delivery and speeding up the planning system. This should translate into increasing demand for infrastructure, which is positive for HWG. For every additional home built in the UK, it is estimated that an additional 69 sq. ft of warehouse space is required. We also highlight the potential off-balance-sheet value of HWG’s pipeline not reflected in its portfolio value. >45% of HWG’s pipeline is held under option/PPA, which we estimate could add >£300m (94p/sh) in value but is currently only held on the balance sheet at £13m (4p/sh). HWG’s business model is proving robust despite the challenging macro environment. With a remaining pipeline of 38.8m sq. ft, the company has sufficient runway to progress towards its NDV target of £1bn (310p/sh) by 2027. During 2024, HWG has already demonstrated transactions and planning approvals, which add >6% to NDV (including the disposal of a site to Microsoft for >£100m with an IRR of >40%).
Another busy and successful period for Harworth leads to continued NAV progression. The shares have performed well YTD but continue to look good value on a 22% discount to spot NAV. Buy.
Harworth anticipates that EPRA NDV as at 30 Jun’24 will be broadly in-line with consensus (Cons: 214p). Positive momentum has continued through planning progress, disposals ahead of NDV and positive revaluations. HWG continues make good operational progress with 86% of budgeted sales for FY24 completed, exchanged or at heads of terms at prices in-line with, or at a premium, to book value. This figure increases to >100% including the Skelton Grange disposal. The prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.20% discount to EPRA NDV, compared to an average c.13% discount for the UK real estate sector. Given the growth potential, we believe HWG could justifiably trade at a premium.
With the shares trading on a 29% discount to EPRA NDV per share and offering 10% per annum total accounting returns, we reiterate our Buy recommendation. We increase our target price from 165p to 195p.
Next week might be less about real estate, and more about politics and football. Will both end up delivering convincing results for the favourites? To listen to this week’s episode of the REcap, please click the image below. #Corporate client of Peel Hunt
Harworth Group PLC Warehouse REIT PLC
Today’s exciting news provides clear evidence of Harworth’s ability to add significant value to its land holdings. We remain at Buy, with a 165p TP.
HWG has announced a significant £106m land sale at Skelton Grange for the development of a hyperscale datacentre. The total consideration of £106m amounts to 22% of market cap, 14% of HWG’s portfolio book value and is >100% premium to the site’s latest book value. The disposal site relates to 48 acres of industrial and logistics space (c.5.5% of c.38m sq. ft pipeline). In our view the announcement exhibits the deep value of the assets contained within the Harworth portfolio, the potential to realise that value and management’s ability to progress and realise value through land promotion. HWG plans to deliver over 5.5m sq. ft (£800m of GDV) by 2029 owning an investment portfolio of >£900m. In our view the long-term prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.32% discount to EPRA NDV, compared to an average c.16% discount for the UK real estate sector.
HWG announced the sale of a 16 acre residential land parcel to Taylor Wimpey at its mixed use Ironbridge development for £19.55m. We view this as affirmation of housebuilder demand for serviced land. Taylor Wimpey plan to develop 200 homes in addition to the 110 homes already planned for development by Barratt and David Wilson homes. The £19.55m (£97k per plot) sale reflects a premium to the 31 December 2023 book value and further evidences value upliftment through land promotion, remediation and completion of infrastructure, driving outperformance as IPD property values continue to face headwinds (MSCI quarterly property values declined 0.6% q/q to March ’24). In our view the long-term prospects for the industrial & logistics and residential markets remain strong with HWG shares at an attractive c.36% discount to EPRA NDV, compared to an average c.14% discount for the UK real estate sector.
Harworth trades on a 34% discount to spot NAV, one of the largest discounts in the listed sector. We reiterate our Buy recommendation and 165p target price.
HWG announced that it is has secured a resolution to grant planning permission at its 185 acre Gascoigne Interchange site in Leeds. We see this as a validation of management’s ability to achieve its land promotion ambitions (target IRR of 15%) even during difficult periods. The development of the 1.5m sq.ft of industrial and logistics space (c.4% of c.37m sq. ft pipeline) represents a significant milestone for the group in achieving its ambitions of reaching £1bn of NDV by 2027. HWG plans to deliver over 3.3m sq. ft (£430m of GDV) by 2027. In our view the long-term prospects for the industrial & logistics and residential markets remain strong with the shares at an attractive c.36% discount to EPRA NDV, compared to an average c.14% discount for the UK real estate sector.
The week's most insightful research and ideas
HWG FOUR PETS RYA VIC AAL EXPN SN/
Overall, Harworth’s AGM statement contains no major surprises and reads well. Trading on a 34% discount to spot NAV, we believe the shares remain attractive. We reiterate our Buy rating and 165p TP.
Harworth released a trading statement re-iterating its target to reach £1bn of NDV by FY’27 (c.50% above Dec ’23 values). HWG continues to experience strong demand for its serviced residential products having already exchanged or in heads of terms on 75% of budgeted sales for the current financial period at prices in-line with, or at a premium, to book value. The industrial and logistics pipeline is progressing with 0.4m sq. ft underway or expected to start during CY24. HWG plans to deliver over 3.3m sq. ft (£430m of GDV) by 2027. In our view the long-term prospects for the residential and industrial & logistics markets remain strong with the shares at an attractive c.37% discount to EPRA NDV, compared to an average c.14% discount for the UK real estate sector.
Ahead of England vs Brazil tomorrow, James pits Primary Health Properties# against Assura, with the former coming out on top. Matt enthusiastically sets out why Harworth# is worth a look following strong results this week.
HWG PHP ARSSF
Another 10% increase in dividends, and a 5.1% total return see Harworth take another step towards its £1bn EPRA NDV target. The shares sit at a 38% discount, which is unwarranted in our view. We reiterate our Buy rating and 165p target price.
Harworth’s FY’23 results show EPRA NDV increased 4.5% to 205.1p which is 3.8% ahead of our estimate (Liberum: 197.6p) delivering a total return of +5.1%. HWG’s business model is proving robust despite the challenging macro environment. During FY’23 HWG developed 193,000 sq. ft of industrial and logistics space, and, with a remaining pipeline of 37.7m sq. ft, the company has sufficient runway to progress toward its target NDV of £1bn by 2027. In our view the long-term prospects for the residential and industrial/logistics markets remain strong with several schemes in HWG’s portfolio with the potential to deliver significant upside in the near-term. The shares stand at an attractive c.35% discount to spot EPRA NDV, compared to an average c.17% discount for the UK real estate sector. Buy.
A strangely quiet, yet busy week, with Harworth’s# yearend trading update the highlight (apart from Luton’s 4-0 win, of course). Another good showing in 2023 highlights just how undervalued this business is. To listen to this week’s episode of the REcap, please click the image below.
The shares sit at a c.36% discount to our upgraded NDV forecast, undervaluing the business model and the portfolio, which should provide strong value creation opportunities for years to come. We remain Buy, TP 165p.
Harworth’s trading statement guides that FY’23 EPRA NDV will be slightly ahead of the current consensus forecasts (consensus: 194p, Liberum: 195.6p). As a result, we nudge our FY23 NDV forecast upward by 1% to 197.6p. Management actions and progress with planning applications are said to have underpinned valuations with HWG’s business model proving robust despite the challenging macro environment. Harworth has developed 193,000 sq. ft of industrial and logistics space in 2023, and, with a remaining pipeline of 37.7m sq. ft, the company has sufficient runway to progress toward its target NDV of £1bn by 2027. In our view the long-term prospects for the residential and industrial/logistics markets remain strong with several schemes in HWG’s portfolio with the potential to deliver significant upside in the near-term. The shares stand at an attractive c.37% discount to spot EPRA NDV, compared to an average c.15% discount for the UK real estate sector. Buy
Harworth announced the completion of 964 plot sales taking the 2023 total to 1,174. Transactions comprised six land parcel sales in Yorkshire and the Midlands to four housebuilders totalling £41.2m (c. 5.6% of June ‘23’s portfolio value). Harworth also announced the Group’s first forward funding agreement as part of its affordable housing portfolio. All plot sales achieved prices that were at or above book values. Considering the macro-economic backdrop, we view this as a highly respectable performance. In our view the long-term prospects for the residential and industrial & logistics markets remain strong with the shares at an attractive c.28% discount to EPRA NDV, compared to an average c.13% discount for the UK real estate sector.
Harworth has missed out on the recent rally, with its shares up just 0.4% over the past two weeks, vs +11% for the wider EPRA UK real estate index. Trading at a 49% NAV discount, the shares look exceptional value to us. We reiterate our Buy recommendation and 165p TP.
James returns from Canada, and goes from watching bears to discussing bulls. Post the results season, we set out our latest sector thoughts, and James highlights one of his top picks, Harworth#. The company this week reported another robust set of results, which seems at odds with the 40%+ discount to gross asset values it currently sits at. To listen to this week’s episode of the REcap, please click the image below #Corporate client of Peel Hunt
Despite the challenging macro environment HWG continues make good operational progress with 98% of budgeted sales for FY23 already completed, exchanged or at heads of terms. During 23H1 EPRA NDV declined by 0.4% to 196p with valuation gains offset by operating and interest costs. Underlying property values were up 1.5% with gains on strategic land largely reflecting management actions. The results are in line with our expectations, and we keep our 31 Dec’23 EPRA NDV forecast of 197p unchanged. In our view the long-term prospects for the residential and industrial & logistics markets remain strong with the shares at an attractive c.46% discount to EPRA NDV, compared to an average c.26% discount for the UK real estate sector.
The shares trade on an unjustified 46% discount to NAV. LTV is amongst the lowest in the sector, c.60% of the portfolio is exposed to industrial and logistics and management have a track-record of adding significant value.
Key Stocks Vistry# (VTYV.L) (Buy, TP 985p) - Bucking the trend (1H, Monday 11 September)Dowlais Group (DWL.L) (Buy, TP 220p) - Tough start - great opportunity (1H, Tuesday 12 September)Keywords Studios (KWS.L) (Buy, TP 3,300p) - Focus on discussions on GenAI (1H, Tuesday 12 September) The Gym Group # (GYM.L) (Buy, TP 225p) - Steady progress (1H, Tuesday 12 September)Redrow # (RDW.L) (Buy, TP 590p) - Finals - how tough is the market? (FY, Wednesday 13 September)Trainline (TRNT.L (Buy, TP 440p) - Focus on tech investment momentum (Trading update, Thursday 14 September) Stocks Previewed Harworth#, MP Evans#, Vistry#, Dowlais Group, Keywords Studios, Regional REIT#, Smart Metering Systems. The Gym Group#, Wickes, Marlowe, Redrow#, Ricardo, Brooks Macdonald#, Gleeson, Kier#, TrainlineTUI, Ten Entertainment#, CVS Group#, Galliford Try#, Close Brothers, Mortgage Advice Bureau#, Babcock International Macro Highlights BoE Governor Bailey has expressed confidence that the peak in UK interest rates is “much nearer” and next week’s data could have a significant bearing on that assessment. Tuesday’s labour market release is especially important and follows a run of survey evidence that has shown hiring plans trimmed, which should soon bear down on average earnings growth. The ECB begins the September round of central bank decisions on Thursday, with markets pricing in a 60% chance of the hiking cycle pausing, despite recent comments by some members dissatisfied with the dovish implied path of future rates. It is also a key data week in the US with CPI, PPI, retail sales and industrial production updates all scheduled.
HWG MPE VTY DWL RGL SMS GYM WIX BRK GLE KIE TRN TEG CVSG GFRD CBG MAB1 BAB RDWWF TUIN KYYWY MRLWF RIR PHLLF
As the new school year kicks off, we return to more news flow including the wind down of IPSX and a cheeky claim that the vehicles listed have outperformed the FTSE 350 incumbents. We get set to welcome Mark Davies back as the next CEO of Primary Health Properties#, and Safestore reported on further softening in demand among its UK business customers. Next week we have interims from Harworth# and Regional REIT#. To listen to this week’s episode of the REcap, please click the image below # Corporate client of Peel Hunt
HWG PHP RGL SAFE
Intense activity, disposals and continued demand from tenants and house-builders offsets yield shift. NAV is expected to be flat in 1H and on unchanged forecasts, the shares on a 41% discount to NAV.
Harworth anticipates that EPRA NDV as at 30 Jun’23 will be broadly in-line with its EPRA NDV of 196p as at 31 Dec’22. Market driven outward yield shift in the industrial & logistics sector has been broadly offset by management actions across the portfolio. As a result we keep our 31 Dec’23 EPRA NDV forecast of 197p unchanged. Despite the challenging macro environment HWG continues make good operational progress with 81% of budgeted sales for FY23 completed, exchanged or at heads of terms at prices in-line with, or at a premium, to book value. In our view the long-term prospects for the residential and industrial & logistics markets remain strong with the shares at an attractive c.39% discount to EPRA NDV, compared to an average c.23% discount for the UK real estate sector.
More than a dozen companies have now reported their results, with Workspace being the star performer, driven by impressive levels of rental growth. We also discuss the first of many upcoming site visits – to Harworth’s Waverley regeneration scheme – and we look forward to (hopefully!) a quieter week ahead. Click on the image below to listen to the Real Estate team's weekly podcast
Harworth Group PLC Workspace Group PLC
A +0.1% total return is a good outcome against a challenging 2H of 2022. Strategic progress continues, and the huge pipeline offers the prospect of material profits over an extended period. With a minor upgrade, the shares are cheap at a c.42% discount to our 2023E NDV per share forecast of 196p.
Harworth has performed well in a rapidly changing market with EPRA NDV down 0.6% in FY22 to 196p, 0.3% ahead of our forecast. FY22 was a year of two halves with NDV up 14% in H1, before a fall of 13% in H2. HWG significantly outperformed the wider property market with values down 2% vs the 15% decline in the IPD/MSCI Index reflecting management actions and further strategic progress. Whilst the macroeconomic backdrop is likely to remain challenging in the near term HWG has a strong balance sheet, no near-term debt maturities and is focussed on long-term growth markets which gives us confidence in a return to double-digit growth over the medium term. The shares stand at a c.39% discount to NDV, more than double the average c.16% discount since the re-listing in 2015.
Harworth remains a top pick. The shares trade on a 37% discount to FY22E NAV and the company benefits from structurally supported sub-sectors, a strong balance sheet and a business model which creates significant value.
Harworth anticipates that EPRA NDV as at 31 Dec’22 will be towards the lower end of the current consensus forecasts range of 190-205p. As a result we reduce our 31 Dec’22 NDV forecast by 3% to 195p. After strong growth of 14% in 22H1 performance in 22H2 was impacted by rising property yields and declining commercial land values. Despite the challenging macro environment HWG continues make good operational progress with a 58% increase in residential plot sales and further acquisitions to strengthen the pipeline. In our view the long-term prospects for the residential and industrial/logistics markets remain strong with several schemes in HWG’s portfolio with the potential to deliver significant upside in the near-term. The shares stand at an attractive c.39% discount to spot EPRA NDV, compared to an average c.13% discount for the UK real estate sector.
Harworth has delivered another strong set of results, with EPRA NDV up 13.7% in H1 22 to 225p, 2% ahead of our forecast. Performance has been driven by continued strong demand for both serviced residential land and industrial and logistics sites. Through delivering most of its value gains from management actions, HWG’s returns are less impacted by general market movements. Whilst the macroeconomic backdrop is likely to remain challenging in the near term HWG has a strong balance sheet, no near-term debt maturities and is focussed on long-term growth markets which are still undersupplied. The shares stand at a 39% discount to NDV, more than double the average c.17% discount since the re-listing in 2015.
Interims: Hard work paying off A 1H total accounting return of 14% is likely to be amongst the highest in the sector and despite having upgraded at the recent trading update, we once again increase our NAV forecast. The stellar result has been driven by management efforts combined with a supportive market. While the market may soften in 2H, we are hopeful that planning consents, development gains and profitable sales will lead to a flat NAV in 2H – a better outcome than for most of our coverage. The shares trade on a c.40% discount to NAV and continue to offer very good value. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
Harworth has had a strong H1 and anticipates that EPRA NDV as at 30 Jun’22 will be ahead of current consensus for 31 Dec’22 of 211p. Performance continues to be driven by strong operational progress and a robust land market, with over 100% of budgeted residential plots sales and 84% of budgeted industrial and logistics land sales for FY22 either completed, exchanged or under offer. As a result we upgrade our Dec’22 NDV forecast by 5% to 224p. Given the wider macro uncertainties FY22 results are likely to be H1 weighted, albeit there are several schemes within the portfolio with the potential to deliver significant upside in the near-term through planning gains. The shares trade at an attractive c.30% discount to spot EPRA NDV, compared to an average c.11% discount for the UK real estate sector.
1H trading update: beating expectations Another strong period with EPRA NDV expected to be ahead of full year consensus and our forecast. This implies a 1H total accounting return of over 10% and although we expect the property markets to soften in 2H, we put through yet another NAV upgrade. Highlights in the period include progressing 84% of annual budgeted land sales, strong warehouse leasing at Bardon Hill, completing the company’s largest residential land sale and selecting a preferred partner to fund 1,200 single-family BTR homes. The shares trade on a 32% discount to NAV and continue to look attractive. Buy. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
The REcap – Friday 17 June 2022 On Monday – as James was recovering from his epic London to Paris cycle ride – Matt was once again upgrading forecasts for Sirius Real Estate# after another strong year of operational and financial performance. With the shares now trading on just 14x 2023E earnings, and a 5% discount to our March 2023E EPRA NTA per share, we believe they offer exceptional value for this excellent company. Another one of our favourites – Harworth# – hosted a Capital Markets Day on Wednesday, and James reflects on what we saw, heard and thought while on site in the Midlands. Have a good weekend. Matthew.Saperia@peelhunt.com, James.Carswell@peelhunt.com, Sebastian.Isola@peelhunt.com #Corporate client of Peel Hunt Click on the link below to listen to the Real Estate team's weekly podcast
Harworth Group PLC Sirius Real Estate Limited
During the capital markets day, HWG provided an update on the pipeline, direct developments and progress on the strategy to reach £1bn of EPRA NDV. All budgeted resi land sales for FY22 are now either completed, exchanged or in heads of terms, either in-line with or above book value whilst 3.9m sq ft has been added to the I&L pipeline. The development at Bardon Hill will be completed in August and is now 78% let/under offer and we think it will deliver an attractive c.7% yield on cost. Whilst we expect HWG to continue to outperform peers over the next year the shares stand at a c.21% discount to EPRA NDV, compared to an average c.11% discount for our UK real estate coverage universe.
Finals: 25% total return a strong start to ambitious strategy Harworth has delivered an EPRA NDV per share of 198p – ahead of our recently upgraded 196p forecast and underpinning a very strong 24.6% accounting return in the year. It also marks a good start in the quest to reach £1bn of EPRA NDV over five-to-seven years, and while returns are likely to moderate through the cycle, the fundamentals of Harworth’s core sectors remain favourable. Our revised forecasts reflect this. We believe the shares remain excellent value, sitting at an unwarranted 18% discount to our new 2022E EPRA NDV forecast of 210p. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com 2-page note
Harworth has delivered a strong set of FY21 results, with EPRA NDV +23.5% to 198p. Growth has been driven by continued strong demand for both serviced residential land and industrial and logistics sites. Further progress has also been made on realising value from key sites within the portfolio, as management seek to deliver on an ambitious plan to double the size of the business to over £1bn.
Outperforming again Harworth now expects its headline NAV metric to be ahead of consensus due to “strong operational performance” and a “buoyant land and occupational market”. Today’s 4% NAV upgrade is our fourth in 12 months and our new forecasts equate to a 23% total accounting return for 2021. This is one of the highest returns in the sector, and yet the shares continue to trade on an unwarranted NAV discount. The shares offer one of the best ways to play the UK industrial and logistics sector, the company remains one of our top picks and we reiterate our Buy recommendation and 210p target price. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
Harworth has had a strong 2021 and anticipates that EPRA NDV as at 31 Dec 21 will be ahead of current consensus of 189p. Performance has been driven by strong operational performance and a buoyant land market, particularly in the industrial and logistics sectors. As a result, we upgrade our 31 Dec 21 NDV forecast by 5.4% to 197p and our target price by 6.6% to 210p and now expect a total accounting return of 24% for 2021, toward the top end of our UK real estate coverage universe. The shares trade at an attractive c.7% discount to spot EPRA NDV, compared to an average c.4% premium for the UK real estate sector.
Another highly profitable land sale in the pipeline Harworth has conditionally exchanged contracts to sell a 278-acre strategic land site in Warwickshire for £53.5m, which reflects a 120% premium to the valuation as at 30 June 2021. The sale is conditional on planning but once again demonstrates Harworth’s ability to identify and assemble strategic land in strong locations. Today’s transaction follows on from Harworth’s recently announced sale at Kellingley at a 74% premium to book value. The company’s extensive industrial & logistics and residential land banks continue to experience strong demand and we believe the shares present excellent value at a 6% discount. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
Harworth has conditionally exchanged on a major land sale at Ansty in Warwickshire which we think has the potential to add c.4% to EPRA NDV. Land values are now rising at the fastest rate for over 10 years and this demand should drive a total accounting return of around 20% for 2021, toward the top end of our UK real estate coverage universe. Despite the superior growth prospects the shares trade at a c.4% discount to spot EPRA NDV, compared to an average 16% premium for the UK real estate sector. On growing confidence in upside risk to our forecasts we increase our TP to 197p from 184p.
Premium disposal highlights the value opportunity The conditional disposal of the Kellingley development site for £54m would crystallise a £23m profit to Harworth, emphasise the company’s prudent book valuation and highlight the value created through the company’s expertise in remediation and master planning. We estimate that the sale will lead to a 3% NAV upgrade, although we await news on the related matters planning application on which the sale is conditional. Despite strong share price performance, Harworth remains one of the few industrial and logistics-focused stocks that trades on a discount to NAV and it remains one of our top picks. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
Harworth has conditionally exchanged on a major land sale at Kellingley which we think has the potential to add c.3% to EPRA NDV. The deal is likely to complete in 2022 with the profit spread across FY21 and FY22. Land values are now rising at the fastest rate for over 10 years and this demand should drive a total accounting return of 18% for 2021, toward the top end of our UK real estate coverage universe. Despite the superior growth prospects the shares trade at a c.5% discount to spot EPRA NDV, compared to an average 18% premium for the UK real estate sector.
Interims: 15% return driven by strong progress on all fronts Harworth has delivered a 15.4% total accounting return in the first half driven by strong valuation gains across the portfolio, with continued demand for both industrial & logistics and serviced land plots. CEO Lynda Shillaw’s review of the business promises a step change in direct development and a broadening of the residential offer, with a target to double net assets on a five to seven-year view. The company is in rude health, and there is another upgrade to our year-end NDV forecast. We see no reason why the shares should languish at a discount, and increase our target price to 190p. The shares offer excellent value: Buy. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com 2-page note
Harworth has delivered a strong set of H1 results, with EPRA NDV +14.5% to 183p, ahead of our forecasts. Performance has been driven by continued strong demand for both serviced residential land and industrial and logistics sites. Good operational progress has also been made. The strategy is evolving, with management committing to an ambitious plan to double the size of the business to over £1bn in the next 5 – 7 years. We upgrade our FY21 NDV by 4.6% to 187p and now expect a total accounting return of 17.9% for 2021, near the top end of our UK real estate coverage universe. We also make a corresponding upgrade to our target price from 175p to 184p, equivalent to a c.10% discount to our two year forward EPRA NDV. BUY.
Logistics-driven upgrade leads to sector-leading returns Harworth’s interim NAV is expected to be “materially ahead” of current expectations for the full year. This leads to an 11% upgrade to our Dec ’21E NAV and Harworth is now expected to deliver a 2021 total accounting return of 17% – one of the sector’s highest returns. The shares sit on a 20% discount to our new NAV forecast, which seems unwarranted compared to most logistics peers on material premiums and Blackstone paying a 21% premium for close peer St. Modwen. Buoyed by structural tailwinds in logistics and regional residential land, Haworth remains a top pick and today we increase our TP to 175p. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com
Harworth has made a strong start to 2021 and anticipates that EPRA NDV as at 30 Jun 21 will be materially ahead of current consensus for 31 Dec 21 of 167p. Performance has been driven by a buoyant land market, particularly in the industrial and logistics sectors. As a result, we upgrade our 31 Dec 21 NDV forecast by 6.8% to 179p and our target price by 8.7% to 175p and now expect a total accounting return of 12.7% for 2021, toward the top end of our UK real estate coverage universe. The shares trade at an attractive c.15% discount to spot EPRA NDV, compared to an average c.18% premium for the UK real estate sector.
Commodity snapSHOT, Harworth, Ted Baker, DWF, Gateley, Bango, U+I, SMID Market Highlights
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Harworth has made a strong start to 2021, with 54% of budgeted residential land sales for this year already secured. Progress has been made at Ironbridge with a final planning decision expected in the next few weeks. Net debt was up modestly reflecting acquisition activity, but the LTV remains low at 15% with liquidity to take advantage of any opportunities that may arise in the near term. We upgrade our target price by 11% to 161p and believe Harworth's focus on the attractive beds and sheds property sectors makes the business well placed to outperform. The shares now trade at a c.11% discount to spot EPRA NDV, compared to an average c.15% premium for our UK real estate coverage universe.
CEO Video - Harworth Group, Healthcare this Week, Screen of the Week, THG, Oxford Biomedica, Naked Wines, SMID Market Highlights
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In these six short videos Harworth CEO, Lynda Shillaw, discusses the Harworth business model, her impression of the Company since joining as the CEO in November 2020, how the investment portfolio has grown in recent years and the strategy behind the acquisitions, how the recovery in housebuilding activity has helped the sale of 'oven ready land', the major development schemes in the portfolio and what to expect from the review of the business.
FY20: On the front foot Profitable land sales, continued operational performance and industrial revaluation gains drives Harworth to an 8% total accounting return in H2. This more than offsets the small decline reported in H1 and leaves NAV ahead of our expectations, despite our 7% upgrade in January. The portfolio is focused on regional residential land and logistics – two of the best performing parts of the real estate market and there is much to go for with around two-thirds of the portfolio unconsented. The undemanding NAV discount of 24% offers an attractive way to play “beds and sheds” and Harworth remains a top pick. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com 2-page note
Despite the challenges posed by the global pandemic, Harworth has delivered strong results for 2020, with value gains in H2 more than reversing the decline in H1. Growth was principally driven by progress on major development sites and rising industrial values. We upgrade our NDV forecasts by 4.0% for 2021 and believe the focus on the attractive ‘beds and sheds’ property sectors makes the business well placed to deliver attractive returns over the medium term. The shares now trade at a c.21% discount to spot EPRA NDV, compared to an average c.22% discount for our non-REIT coverage universe.
Positioned for growth Following a series of encouraging residential land sales and mounting evidence of an especially strong Q4 for industrial property valuations, Harworth now expects its NAV to be ahead of expectations. Recently appointed CEO Lynda Shillaw also reports a cautiously upbeat outlook and “looks forward to leading Harworth through its next phase of growth”. Today we upgrade our NAV forecast by 7% which leaves the shares on a 31% discount – far wider than other industrial and logistics focussed companies and more than double St. Modwen’s discount. We retain our Buy recommendation. James.Carswell@peelhunt.com, Matthew.Saperia@peelhunt.com, Sebastian.Isola@peelhunt.com 2-page note
Harworth reports a period of strong operational performance in H2 2020, with land sales achieved at or above 2019 book value. Furthermore, the indicative outcome of the independent valuation means that EPRA NDV will be ahead of expectations and we therefore increase our 31 December 2020 forecast by 3.1%. Net debt was broadly unchanged in the period providing Harworth with liquidity to take advantage of any land or property opportunities that may arise in the near term. We believe Harworth's focus on the attractive beds and sheds property sectors makes the business well placed to navigate the challenges presented by the COVID-19 pandemic. The shares now trade at a c.31% discount to our new spot EPRA NDV, compared to an average c.25% discount for our non-REIT coverage universe.
Harworth reports a period of solid operational performance in 20H1, with investment assets up 2.7% and high rent collection of c. 95%. As expected, there was a write down of developments and strategic land reflecting weaker market sentiment, however, with over 70% of 2020 targeted sales secured and the potential for planning gains at a number of key sites in the near term we see this as largely a timing issue. We believe Harworth's strong balance sheet and focus on the attractive beds and sheds sectors makes the business well placed to outperform UK property peers. The shares (-34% YTD) now trade at an attractive c. 40% discount to spot EPRA NDV per share, compared to an average c.30% discount for our non-REIT UK coverage.
Harworth reports a period of solid operational performance in H1 2020, with key land sales at Coalville and Leeds both achieved at or above book value. Rent collection at 95% for the June quarter date was at the top end of real estate peers and in line with historical performance.
Building Materials & Equipment Hire; Sector Comment, Harworth, Great Potland Estates, ASML, STM, Lufthansa, Whitbread, easyJet, Assura, Integrafin, Pets at Home, Motorpoint, Pendragon, SiS, Market Highlights
HWG TPK HWDN PSN ASML STMPA LHA WTB EZJ AJB IHP PETS MOTR PINE 8D9 ARSSF
Despite the disruption caused by COVID, Harworth has continued to make good progress across each business area. Liquidity has also been enhanced with an increase in the RCF announced at the end of April.
Despite the disruption caused by the Covid-19 pandemic Harworth has continued to make good progress across the business with a major sale completed and further lettings reducing the vacancy rate to 4.8%. Infrastructure work has continued at key sites that have agreed sales in place and liquidity has been improved with a £30m increase in the RCF.
Harworth delivered a robust performance in 2019, with a total return of 7.8% as further progress was made on land sales and replenishing the pipeline. NNNAV growth of +7.2% was in line with our expectations and was largely driven by value gains at major developments.
Harworth reported a period of solid operational performance in H2 2019, which together with the indicative independent valuation means the principal performance measure NNNAV is expected to be in line with expectations. Whilst good progress has been made during the period across each business area, planning headwinds remain a key challenge.
Harworth reports a period of a solid operational performance in H2 2019, which together with the indicative independent valuation means the principal performance measure NNNAV is expected to be in line with expectations. Progress has been made across each business area, but planning headwinds remain a key challenge.
Mud & Muck, Strategy Screen of the Week, Keller, SMID Market Highlights
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Harworth, Mud & Muck, Strategy Screen of the Week, Keller, Market Highlights
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Harworth has had a positive first half, with good progress made on land sales and replenishing the pipeline. NNNAV growth of 12.6% y/y is ahead of the long-term total return target.
Harworth has had a positive first half, with particularly good progress made on land sales and replenishing the pipeline. NNNAV growth of +12.6% y/y (or +1.4% since FY18) is ahead of the long-term target, largely due to value gains and the impact from additional income generated from acquisitions in 2018.
Harworth, Asiamet CEO Video, Market Highlights
Harworth Group PLC Asiamet Resources Limited
Harworth’s capital markets day illustrated how the group’s expertise creates a competitive advantage; aiding the ability to buy land well and generate wider economic benefits. Further detail around the group’s new regional structure also highlighted the advantages from its local knowledge and relationships as well as potential for future scalability.
Harworth has had a good start to 2019, with progress made on planning, land sales and replenishing the pipeline. Planning applications are on track and 60% of budgeted sales for the year have already been agreed or completed, aiding confidence in our unchanged forecasts for double-digit returns.
Harworth, GetBusy, Capital Goods: Early Cycle Indicator, Morgan Sindall Group, Genus, 4imprint Group, CareTech, Consumer Discretionary: Dealspotting, SMID Market Highlights
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Harworth, GetBusy, Capital Goods: Early Cycle Indicator, Morgan Sindall Group, Genus, 4imprint Group, Just Eat, CareTech, Consumer Discretionary: Dealspotting, Market Highlights
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We see significant upside to Harworth’s equity value. We believe the business is capable of generating double-digit annual returns for the foreseeable future, through its own initiatives.
Harworth has released a confident set of FY15 prelims this morning. The financial performance is ahead of our expectations and the momentum with which the Group ended FY15 looks to have continued into the new year. Management has an excellent track record of unlocking value from the portfolio and ambitions to invest in new (former industrial) sites at a rate of £20m per annum over the medium term. A stated target of double digit post-tax returns on net assets looks highly achievable and underpins our Buy recommendation.
aHarworth Group owns swathes of former colliery and industrial sites across the Midlands and North of England, which it is steadily transforming for commercial and residential development. The flagship site at Waverley, near Sheffield, is a shining example of what can be achieved. There, one of the largest coalfields in Europe is being remodelled as an attractive residential community and centre of excellence in advanced manufacturing. Management has an excellent track record of unlocking value from the portfolio. A stated target of double digit post-tax returns on net assets looks highly achievable. We initiate coverage at BUY ahead of FY15 prelims on 24th February. Our Target Price of 13p equates to <1.1x FY17 NAV.
