Metrofile Holdings Ltd – H1:25 Results – South Africa’s Bottomline Turns

Share Code: MFL – Market Cap: R0.7bn – PE: 14x – DY: 8%

Metrofile Holdings – H1:25 – Results NoteDownload

H1:25 Results: The Good Offset by the Bad

Metrofile reported a disappointing H1:25 as improvements in MRM South Africa were offset by struggles in other non-digital areas. Group continuing revenue increased by 4%, driven by secure storage and cloud services, but this was impacted by declines in content services and image processing.
While MRM South Africa improved operating profit by 19%, MRM Rest of Africa & MRM Middle East faced challenges, and Normalised HEPS decreased by 18% to 10.7cps (H1:24 – 13cps).
Newly classified segment, “Cloud & Content Services”, saw revenue increased by 9% to R74m, but operating profit decreased by 10% to R10m. Metrofile Cloud (previously, IronTree) demonstrated consistent growth but (project-driven) Metrofile VYSION had a slower period.
Management focus remains on building a digital offering, generating free cash flow, and reducing the Group’s debt.

Our Thoughts: “Cloud & Content Services” Segment Revealed

The exit of Tidy Files and separating of the Group’s digital businesses into the “Cloud & Content Services” segment allow us to value this segment separately.
Due to this, we have added a Sum-of-the-Parts (SOTP) model focussing on EV/EBITDA relative multiples drawn from listed digital document/file storage companies.

Forecast, Valuation & Implied Return: 250~300cps fair value range

While we have maintained our DCF approach as a sense-check, we have changed our valuation methodology to an EV/EBITDA driven Sum-of-the-Parts (SOTP) given the different profile that the newly disclosed “Cloud & Content Services” segment has from the rest of the Group and, thus, the different multiple it could arguably demand in the market.
Based off this, we see Metrofile’s fair value as 297cps (previously: 347cps), implying an EV/EBITDA of 6.4x & a PE of 16.7x. Rolling our fair value forward, we arrive at a total return 12m TP of 347cps (previously: 403cps).

This agrees with our DCF Model’s views and, broadly, we think that the Group’s fair value range is from c.250cps to c.300cps.

Metrofile Holdings – H1:25 – Results NoteDownload

Stor-Age Property REIT Limited – Valuation Update & Change in Analyst

Share Code: SSS – Market Cap: R7.1bn – PB: 0.9x – DY: 8%

Stor-Age – Change of Analyst Ad Hoc Note – 2 February 2025 Download

Reason for this Ad Hoc Note: A change in analyst and resulting review of valuation approach, fair value and 12m TP. Forecasts will be updated following the FY 25E results.

Thoughts: Well-run, Well-positioned & Globally Competitive Self-Storage REIT

Stor-Age owns a well-managed, growing self-storage property portfolio that was built out of a strong SA-base (that remains robust and growing) and is increasingly allocating capital towards the UK (Rand Hedge benefits) while cleverly leveraging the somewhat lower balance sheet intensity of JV funding structures to build out what will likely become a substantial portfolio.
Rental income growth has been strong, historically outpacing inflation, with SA averaging around 10-11% and the UK around 6-9% over the past 5 years. Occupancy rates are high in owned properties, exceeding 90% in South Africa and around 85% in the UK, while JV properties are still in their lease-up period, with occupancy around 60%.
The Group’s Net Property Operating Income (NPOI) margin has been consistently around 74% since FY19. EBITDA margins are also strong, at 66-67% while financial performance is underpinned by solid cash flows and a history of distributing nearly all Funds From Operations (FFO) as dividends; Note that the company has recently shifted its distribution policy from 100% to 90-95% of FFO, retaining some capital for growth.
The Net Asset Value (NAV) per share has steadily increased, providing a solid return and we consider the Group’s balance sheet comfortably/lowly geared.
Refer to Annexure A and Annexure B whereby we further review the Group’s history and examine the global self-storage market and Stor-Age’s listed peers around the world.

Valuation and 12m TP: Relative Model and Dividend Discount Model Used

Interestingly, Stor-Age’s share price has not kept pace with NAV growth, leading to a current Price/Book (“PB”) ratio of 0.8~0.9x. Given what we consider conservative valuations of its underlying investment properties, the potential for both Rand Hedge benefits from its UK portfolio, optionality for organic and acquisitive growth, we think that the share should (at least) track its historic c.1.0x PB ratio over time.
We determined the fair value for Stor-Age by using a Relative Valuation Model and a Dividend Discount Model:
- Relative Value: Our fair value is R15.90 per share
- Dividend Discount Model: Our fair value is R14.57 per share.
- Equal-weighted average valuation: Result is R15.23 per share.
Rolling this fair value forward, we arrive at a 12m Target Price of R17.10 (Previously: R16.73); factoring in dividends, we expect this to generate a 12m Expected Return of ca 24% from the current share price.
Note that the international peer averages used exclude some USA peers due to differences in accounting practices, namely, that their investment properties are not fair valued on their balance sheet. This distorts their PB ratios and makes PB comparisons difficult.

Stor-Age – Change of Analyst Ad Hoc Note – 2 February 2025 Download

Stor-Age Property REIT Limited – H1:25 Results – Building on a Solid Foundation

Share Code: SSS – Market Cap: R7.53bn – PE: 8.8x – DY: 7.29%

Stor-Age – H1:25 – Results NoteDownload

H1 FY 24 Results: In-line to better-than-expected

Distributable income grew by 3.5% from H1 FY24 (61.36cps) to H1 FY25 (63.51cps). This growth lagged the growth in FFO which rose nicely by 7.0%.
Rental income grew 8.1%, predominantly attributable to above inflation same-store rental growth in the SA segment. In the UK, same-store rental rate increases were in line with UK inflation but a good improvement in occupancies contributed to this segment’s growth.
Management have guided for FY25E distributable income of 122cps~126cps (the mid-range of this guidance implies a Forward Dividend Yield of c.7.9%).

Thoughts: UK difficulty offset by SA strength

Competitive pressures in the UK may result in limiting Storage King’s rental growth to inflation but a solid performance in the SA segment has continued with rental rates growing above inflation whilst still maintaining target occupancies levels (c.92.0%).
Shurgard’s acquisition of Lok’nStore is a good proxy for implying a valuation of the Group’s UK segment – we explore this further in the body of this note.

Updated Forecast and Valuation: Valuation & TP Lifted

We see Stor-Age’s fair value as R16.16 per share (previously R15.50) based on a blended valuation approach (DCF & relative P/B & EV/EBITDA values).
Rolling forward our fair value by 12 months at our Cost of Equity (less our expected dividend) gives us a 12m TP of R16.73 per share (previously R15.97), implying a total return of c.14.1% (price return of +7% and an expected dividend return of +7.14%).

Stor-Age – H1:25 – Results NoteDownload

Astoria Investments Ltd – Results Note – Crystalizing NAV with Optionality

Share Code: ARA – Market Cap: R537m – Discount to NAV: c.39%

Astoria Investments – Q3:24 – Results NoteDownload

Q3:24 Results: Headwinds of a Stronger Rand

Astoria reports quarterly but management only update unlisted valuations in the Q2 and Q4 reports. Thus, the key change over the Q3:24 period was a stronger Rand (c.9% stronger on a 12m-rolling basis and c.6% stronger versus the start of the current reporting period versus the USD).
With this context, Astoria’s NAV per share increased by +2.1% in USD and decreased by 3.7% in ZAR for the Q3:24 period (as compared to NAV at the start of financial year).

Astoria’s NAV components:

Commentary: ISA Carstens (Potential) Exit Proving Solidity of NAV

Astoria has received a non-binding offer for its stake in ISA Carstens &, along with fellow shareholders, final terms are being negotiated. While the offer is non-binding, its pricing is broadly in line with Astoria’s fair value for ISA Carstens. This gives us a great data point for the realism of management’s fair values for their unlisted investments (the 3^rd-party offer aligns with Astoria’s valuation). Finally, this potentially turns c.8% of the Group’s NAV into cash which would provide management with ammo for future investment options (i.e. embeds some exciting optionality for future capital allocations).
Outdoor Investment Holding continues to trade well, Leatt Corp’s latest quarterly hints at a trough being reached, RECM Calibre has changed its name to Goldrush Holdings (code: GRSP), low diamond prices continue (Land is doing relatively well while Marine has its ship in dry dock for well-timed maintenance), & VCG continues corporatising and scaling.

Valuation, 12m TP & Implied Return: Discount a Little Tighter

Astoria’s share is trading at c.39% discount to the current NAV (Previously: 45%) once we update its NAV with current prices.
If we take out our calculated “HoldCo discount” of c.13.6% (Previously: 14.4%) from this NAV, we arrive at a fair value for Astoria’s shares of c.1216cps (Previously: 1204cps) or c.41% higher than the current share price.
Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1433cps (Previously: 1417cps) that implies a potential return of c.66% from the current share price.

Astoria Investments – Q3:24 – Results NoteDownload

Stor-Age Property REIT Limited – Initiation of Coverage – Good Stor(e) of Capital

Share Code: JSE: SSS – Market Cap: R7.2b – PE: 17.0x – DY: 7.9%

Stor-Age Property REIT – Initiation of CoverageDownload

Business Overview:

Stor-Age is an integrated & internally managed REIT that owns & operates self-storage properties in South Africa and the United Kingdom with a portfolio comprising of 103 properties (60 in SA operate under Stor-Age brand & 43 in the UK operate under the Storage King brand).
Stor-Age is the largest, market-dominant self-storage brand in SA whilst ranking 6^th in the UK (the UK is an under-penetrated Developed Market based on self-storage space per capita versus other DMs).

Key Upsides & Downsides:

The current interest rate-cutting cycle may lower finance costs, boost valuations & increase the attractiveness of the property sector.
Furthermore, Stor-Age has a highly defensive product (self-storage), and the share price has been resilient through economic downturns with an excellent track record of operating and dividend growth.
Self-storage has high barriers to entry that includes long lease-up periods for newly developed properties and limited available properties in high-density, visible urban nodes.
The Group has a fast-growing, high-margin income stream of management fees from third-party property management and digital marketing platform that offer its shareholders exciting optionality.
Management has a pipeline of 13 properties that are expected to add 60,000m2 of GLA to its portfolio in the near term.
Management has decided to decrease its distributable income payout ratio from 100% to a more sustainable 90~95%, thus resulting in some downward pressure on short-term distributions per share despite expected growth in forecast distributable income.

Forecast, Valuation and Implied Return:

We see Stor-age as having a fair value of c.R15.50 per share based on a blended average of a discounted cash flow valuation (R15.92) and relative valuation model (R15.08); the latter is based on the valuation multiples of comparable listed self-storage peer companies.
Rolling forward our fair value by 12 months at our Cost of Equity (less our expected dividend) gives us a 12m TP of R15.97 per share, implying a total return of c.14% based on the current share price (R15.02).
We see a c.14% total return in the stock as comprising a forecast price return of c.6% and forecast dividend yield of c.8%.

Stor-Age Property REIT – Initiation of CoverageDownload

Metrofile Holdings – FY 24 Results – Disappointing but could be the Bottom

Share Code: MFL – Market Cap: R1.1bn – PE: 15.1x – DY: 5.6%

Metrofile Holdings – FY 24 – Results NoteDownload

FY 24 Results: Weaker than expected

Metrofile’s revenue rose only +1% with MRM South Africa’s revenue slipping -3% hurt the Group as delayed decisions by customers and slower product sales and revenues from digital more than offset good box pricing.
The MRM Middle East’s EBITDA margin fell as management had to fend off two large new entrants in the market, MRM South Africa’s scanning margins saw pressure from internal issues and continued weakness in Kenya saw management impair goodwill by R53.5m in this segment
Management has decided to wind up Tidy Files (successfully executed after year-end), triggering a R19.9m one-off in FY 24.
All these one-offs combined to negatively hit EPS by c.12.6cps with EPS coming in at 3.9cps (FY 23: 32.1cps) but—excluding the one-offs—the Group’s Normalized HEPS declined to 20.0cps (FY 23: 32.1cps).
Despite these troubles, the Group’s cash generation remained strong (R287m of EBITDA generated R309m of cash from operations), degearing continues (Net Debt dropped -9% to R537m) and the Group declared a full-year dividend of 14cps.

Our Thoughts: New CEO, revised forecasts

The Group has a new CEO with a solid background, the current CFO steps into MRM South Africa’s turnaround as MD of this major segment, & the Board will announce a new CFO shortly.
We have been relatively ruthless by lowering some long-term assumptions and downgrading FY 25E HEPS by c.-17% (but still see it recovering from FY 24’s trough earnings).

Forecast, Valuation & Implied Return: Lower discount rate

We see Metrofile’s fair value as 347cps (previously: 390cps), implying an EV/EBITDA of 7.0x & a PE of 21.1x; this compares attractive to Iron Mountain’s current multiples (see below):

The change in our fair value is less of a downgrade than our cut in earnings as the large drop in South Africa’s sovereign bond yields over the period has propped up our segmentally-driven DCF fair values (i.e. future cash flows are now worth somewhat more).
Rolling our fair value forward, we arrive at a total return 12m TP of 403cps (previously: 456cps), implying a high c.61% return (including dividends) from these levels.

Metrofile Holdings – FY 24 – Results NoteDownload

Sabvest Capital – H1:24 Results – Returning to Growth

Share Code: SBP – Market Cap: R2.9bn – Dividend Yield: 1.2%

Sabvest Capital – Results Note – H1:24Download

H1:24 Results: NAV Returns to Growth

Sabvest’s Net Asset Value (NAV) grew +3% y/y to 11786cps (H1:23 – 11465cps), management hiked the Group’s dividend to 35cps (H1:23 – 30cps), and bought back a further R51.7m shares during the period (average price of c.6893cps versus the NAV of 11786cps and the current share price of 7450cps).
Many of the Group’s underlying businesses recovered/grew nicely: Apex, Flexo and ITL all performed well while Corero’s share price more than doubled, and Transaction Capital unbundled We Buy Cars Holdings (JSE code: WBC).

On a balance, the Group’s portfolio outlook is good, its valuations are proving conservative (see ‘Thoughts’ below) and management is steadily degearing as cash is realized and/or flows centrally.

Thoughts: Exits Underscore Conservative Valuations

Sabvest has (1) agreed to exit Metrofile in two tranches at an above-market price (301cps), (2) received an initial R80.6m from its exit of Sunspray (at above-book at the time), & (3) concluded an exit from Rolfes that should be at a premium to its previous value in the Group’s NAV.
This is c.6% of assets being realized at above-book prices (proceeds should go into degearing) and it goes to evidence Sabvest’s conservative unlisted valuations.

Valuation, 12m TP & Implied Return: Discounted

The share is trading at a c.37% discount to NAV, which is well off from the JSE-listed peer group average discount particularly when compared based on Sabvest’s superior track record (i.e. the Line-of-Best-Fit below).

Using our updated NAV (with the latest market prices) we arrive at a defendable (post-discount) fair value for Sabvest’s shares of 10754cps (previously: 9817cps), which still includes a HoldCo c.10% discount against this NAV (unchanged from prior period).
Rolling our post-discount fair value forward, we see the Group’s 12m TP as 12616cps (previously: 11675cps) with an implied return of +69%.

Sabvest Capital – Results Note – H1:24Download

Astoria Investments – Results Note – Navigating the Rough Well

Share Code: ARA – Market Cap: R484m – Discount to NAV: 45%

Astoria Investments – Q2:24 – Results NoteDownload

H1:24/Q2:24 Results: Fully-invested with OIH Paying Dividends

With a stronger Rand and lower RACP (soon-to-be renamed ‘Goldrush Holdings’) and Leatt Corp share prices, Astoria’s USD-NAV and Rand-NAV softened -2.9% and -3.5% respectively.
During the six months, Astoria invested more into Leatt Corp (LINK), and received a legacy agterskot payout. We currently consider the Group fully invested, but dividend flows from Outdoor Investment Holdings (OIH) should provide incremental capital for deployment & compounding.
Finally—as per policy—management have refreshed the Group’s unlisted company valuations, which we specifically discuss in the context of their performance and their peers.

Commentary: Leatt, Goldrush & Diamond Headwinds Cannot Last

OIH saw broad growth (excluding Family Pet Centre), Trans Hex (Land & Marine) somewhat bucked diamond trends with good pricing, ISA Carstens showed its quality, and the Vehicle Care Group (VCG) steadily (and responsibly) began scaling.
Unfortunately, Leatt Corp (trading its way through excessively stocked wholesale markets) and Goldrush (loadshedding hurting EBITDA margins) saw their share prices under pressure during the period, which created some headwinds to NAV.
Loadshedding (appears) gone for the moment and the wholesale market for Leatt should righten itself over time, thus implying upsides in both businesses from these levels.

Valuation, 12m TP & Implied Return: Widening of Discount

Astoria’s share is trading at c.45% discount to the current NAV (Previously: 40%) once we update its NAV with current prices.
If we take out our calculated “HoldCo discount” of c.14.4% (Previously: 14.2%) from this NAV, we arrive at a fair value for Astoria’s shares of c.1204cps (Previously: 1162cps) or c.54% higher than the current share price.
Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1417cps (Previously: 1386cps) which implies a potential return of c.82% from the current share price.

Astoria Investments – Q2:24 – Results NoteDownload

Astoria Investments – Results Note – Leatt Investment Concluded

Share Code: ARA – Market Cap: R508m – Discount to NAV: 40%

Astoria Investments – Q1:24 – Results NoteDownload

Q1:24 Results: Currency headwinds

Astoria Investments reported its Q1:24 results that show Net Asset Value (NAV) per share decreased -7.7% and -4.8% in USD and ZAR respectively as currency headwinds impacted translations and Goldrush (code: RACP) and Leatt’s (code: LEAT) share price pressure endured for this period.
As a reminder, Astoria’s reporting policy for Q1 and Q3 periods is not to perform detailed valuations of unlisted investments (except when developments require an immediate and material change in value). Price changes for listed investments and currencies are reflected on an ongoing basis.
In our updated Sum-of-the-Parts (SOTP) valuation below and on the next page, we have done the same and updated our view for the latest share prices and exchange rates.

Commentary: Further Leatt Investments Concluded

Astoria’s further acquisition of Leatt Corp’s shares was concluded during this period. We discuss this investment and the underlying business in some detail in our previous results note (LINK) and consider it an attractively priced asset with the deal using Astoria’s equity in a non-dilutive manner.
Late in April, Astoria’s management hosted an investor event that was recorded and can be viewed here: LINK.

Valuation, 12m TP & Implied Return: Above Average Discount

Updating Astoria’s NAV to current prices, the share is trading at c.40% discount to the current NAV (Previously: 42%).

If we take out our calculated “HoldCo discount” of c.14.2% (Previously: 13.9%) from this NAV, we arrive at a fair value for Astoria’s shares of c,1162cps (Previously: 1192cps) or c.42% higher than the current share price.
Rolling this fair value forward at our Cost of Equity, we arrive at a 12m TP of c.1386cps (Previously: 1420cps) that implies a potential return of c.69% from the current share price.

Astoria Investments – Q1:24 – Results NoteDownload

Astoria Investments – Results Note – Discount Appears too Wide

Share Code: ARA – Market Cap: R498m – Discount to NAV: 42%

Astoria Investments – FY 23 – Results NoteDownload

FY 23 Results: A Mixed Bag of Results

Astoria’s USD Net Asset Value (NAV) felt pressure and slipped marginally to $0.7947 per share (FY 22: $0.8266 per share), though the Rand NAV was slightly up at 1454cps (FY 22: 1406cps) as the Rand weakened over the period.
A decline in diamond prices was a headwind on diamond interests, loadshedding hurt Goldrush’s LPM performance & Leatt’s share price followed its sales down over an extra-ordinary trading period.
On the other hand, Outdoor Investment Holdings (OIH) traded (really) strongly (see relative sales performance below), ISA Carstens saw +10% enrolment growth & Vehicle Care Group (VCG) is proving its model nicely.

Commentary: Conservative NAV & Upside Optionality

Other than valuing A-Tec in OIH separately as a Norwegian asset and lifting ISA Carsten’s Academy multiple from 6.0x to 7.0x (but it remains well below other listed educational stock multiples), Astoria’s unlisted valuations remain largely consistent with history and, arguably, conservative.
A FY 24E normalisation in diamond prices & in Leatt Corp’s trading environment could point to upside in Astoria’s NAV (Leatt & diamond interests are a third of the Group’s NAV).