The Russian economy continues to improve, a good level of occupier demand is running well in excess of falling new warehouse supply and FX markets have been relatively calm. Against this backdrop, Raven (LON:RUS) produced a solid H1 performance and the balance sheet is strongly positioned for further significant acquisition of yielding assets. These have the potential to materially lift our reduced near-term forecasts for earnings and distributions and mitigate the negative effect on current portfolio rental income should the market fail to recover over the medium term.
Solid H1 earnings result and strong cash position
H117 earnings were broadly unchanged compared with H216 on the company’s underlying measures, although sharply lower y-o-y. Warehouse occupancy was similar at 30 June 2017 to the FY16 year end (79% vs 80%) but rents continue to revert to lower market levels but local currency costs are well controlled and the logistics subsidiary. RosLogistics continues to show good growth.
Since H1 the cash balance has risen to $237m, including the proceeds of July’s £102m issue of convertible preference shares targeted at further yielding acquisitions. Our reduced estimates (see pages 4-5) include the additional cost of the July issue, but as yet include no benefit from likely acquisitions. After a proposed 1p per share interim distribution we forecast distributions for both FY17 and FY18 of 2p.