NSR Details

Continued Increase in Occupancy: National Storage REIT (ASX: NSR) is an owner and operator of self-storage centres in Australia and New Zealand. The company has a large number of self-storage centres under operation, management or license, serving over 60,000 customers across the two markets.

Recent Updates: (a)The company recently updated that the 2019 Annual General Meeting will be held on 13 November 2019. (b) As per another recent announcement, the company updated that the voting power of FMR LLC increased from 8.05% to 9.07%.

Highlights of FY19 Financial Results: During the year ended 30 June 2019, total assets under management stood at $1.95 billion, up 36% on prior corresponding period value of $1.43 billion. Underlying earnings for the year stood at $62.4 million, up 21% on prior corresponding period. Net tangible assets per stapled security were reported at $1.63, up 8% on prior corresponding period NTA of $1.51 per security. Underlying EPS for the period stood in-line with the guidance at 9.6 cents per share. During the year, the company generated storage revenue amounting to $139.4 million, representing an increase of 13% on prior year’s revenue of $123.6 million. As at 30 June 2019, the company had a cash balance of $178.8 million.


P&L Statement (Source: Company Reports)

Occupancy Status: During the year, around 60% of the company’s centres reported occupancy of 80% or above. Also, 17% of centres were trading above 90% occupancy in FY19. Occupancy pertaining to the Australian Portfolio stood at 81.4% and that for New Zealand portfolio stood at 85.7%. Majority of the states witnessed a continued improvement in occupancy, with the highest increase reported for Western Australia at 4.8%. This was followed by Tasmania, Australian Capital Territory and Queensland that reported occupancy growth within the range of 1% - 3%.


Occupancy by State (Source: Company Reports)

Strategic Initiatives: During FY19, the company came up with 9 new acquisitions and 3 new development sites for the expansion in New Zealand. Going forward, the company is eyeing strong opportunities for expansion with 6 more centres coming up in Auckland. Currently, the company has 13 ongoing development and expansion projects along with 6 completed developments in FY19, which are expected to provide significant value to the existing portfolio. During the year, the company also entered into joint venture arrangements with APSF, BFG and Parsons, which are expected to add significant value to the business, going forward. Moreover, it is looking forward to an extended relationship with the above partners through a pipeline of new projects.

Guidance: In FY20, the company expects to report a growth of over 4.0% or 10.0 cents in underlying EPS. Total underlying earnings growth is expected to be more than $78 million, representing a percentage growth of more than 25%.

Stock Recommendation: The stock of the company generated positive returns of 2.23% and 5.17% over a period of 1 month and 3 months, respectively. Currently, the stock is trading close to its 52-week high level of $1.907 and has a market capitalisation of ~$1.44 billion. In FY19, the company reported continued growth in its portfolio on the back of myriad new acquisitions. Net margin for FY19 stood at 91.0%, which is higher than the industry median of 85.4%. EBITDA margin for the year stood at 58.8%, representing a marginal increase on prior period margin of 58.2%. Given the backdrop of the above factors and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $1.810, down 1.093% on 15 October 2019.

 
NSR Daily Technical Chart (Source: Thomson Reuters)

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