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Blog: 3 October 2016 (What does Coronation have in Store-age?)
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We take a look at a recent SENS announcement by Stor-Age (SSS) that Coronation (CML) now owns 15% of the issued share capital in the company via portfolios it manages on behalf of clients. Is Coronation seeing value in this niche property counter?
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So who is Coronation and Store-Age
Coronation:
Coronation Fund managers (CML) is one of the largest asset management companies in South Africa. With assets under management topping R606billion. Their basket of services includes unit trusts, retirement funds, institutional investor services etc.
Their main competitors in this market segment includes Allan Gray, Foord Asset Management, Investec, Prudential, PSG Wealth to name but a few. These companies fortunes often rely heavily on the performance of the stock markets they invest their clients money in, as they earn performance fees from these funds. The trick for these companies is to ensure annuity or recurring earnigns (not based on stock market performance) is grown over time, to make them less vulnerable against market movements.
Coronation has a fantastic track record for their various funds, and their slogan "Trust is Earned" is embedded in a lot of investors minds after numerous advertising campaigns they ran to promote their business.
Stor-Age:
Stor-Age Property REIT Limited (“Stor-Age”), a fully integrated and internally managed real estate investment trust (“REIT”) which is listed on the JSE, is the leading and largest self storage property fund and brand in the South African market.
Stor-Age is a highly specialised property fund focused on the fast growing self storage sector, a niche sub-sector of the broader commercial property market.
Stor-Age’s objective is to deliver an attractive income stream from a portfolio of high quality self storage properties with potential for income and capital growth through increasing rentals and occupancy levels, expanding existing properties and acquiring additional self storage properties.
Coronation Fund managers (CML) is one of the largest asset management companies in South Africa. With assets under management topping R606billion. Their basket of services includes unit trusts, retirement funds, institutional investor services etc.
Their main competitors in this market segment includes Allan Gray, Foord Asset Management, Investec, Prudential, PSG Wealth to name but a few. These companies fortunes often rely heavily on the performance of the stock markets they invest their clients money in, as they earn performance fees from these funds. The trick for these companies is to ensure annuity or recurring earnigns (not based on stock market performance) is grown over time, to make them less vulnerable against market movements.
Coronation has a fantastic track record for their various funds, and their slogan "Trust is Earned" is embedded in a lot of investors minds after numerous advertising campaigns they ran to promote their business.
Stor-Age:
Stor-Age Property REIT Limited (“Stor-Age”), a fully integrated and internally managed real estate investment trust (“REIT”) which is listed on the JSE, is the leading and largest self storage property fund and brand in the South African market.
Stor-Age is a highly specialised property fund focused on the fast growing self storage sector, a niche sub-sector of the broader commercial property market.
Stor-Age’s objective is to deliver an attractive income stream from a portfolio of high quality self storage properties with potential for income and capital growth through increasing rentals and occupancy levels, expanding existing properties and acquiring additional self storage properties.
Now the question is why does CML own such a large chunk of Stor-age? Is it because they see value in the share at current prices, or is due Coronation's size? Where they get so much money in to invest on behalf of clients (via monthly debit orders for unit trusts etc.) that they are mandated to invest locally and in specific sectors (depending on the rules and mandates of the various funds they manage)?
According to SSS's latest financial results, they are trading on a very steep PE of over 30, while at the same time delivering a dividend yield of roughly 3%. Does Coronation expect a stellar set of earnings to come from SSS or is it as we mentioned earlier, purely due to their size they have to invest in certain sectors and shares, even if some of the counters within a specific industry might not offer the best of value?
We will do a valuation soon on SSS and decide for ourselves is there is value to be found in SSS or if Coronation is becoming a victim of it's own success and are investing money in shares because they are mandated to do so and not because they see value. Check in later in the week and we will have a valuation up for Stor-Age (SSS)
According to SSS's latest financial results, they are trading on a very steep PE of over 30, while at the same time delivering a dividend yield of roughly 3%. Does Coronation expect a stellar set of earnings to come from SSS or is it as we mentioned earlier, purely due to their size they have to invest in certain sectors and shares, even if some of the counters within a specific industry might not offer the best of value?
We will do a valuation soon on SSS and decide for ourselves is there is value to be found in SSS or if Coronation is becoming a victim of it's own success and are investing money in shares because they are mandated to do so and not because they see value. Check in later in the week and we will have a valuation up for Stor-Age (SSS)