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QuotedData’s morning briefing 26 September 2022

India Capital Growth - Shakeout uncovers value

In QuotedData’s morning briefing 26 September 2022

  • India Capital Growth (IGC) had a difficult start to 2022, underperforming the BSE Midcap total return index by 6.2% over the six months ended 30 June 2022. The trust returned -14.7% in NAV terms and -19.8% in share price terms (and that is after benefitting from a 4.3% drop in the value of the pound versus the rupee over the period). The chair’s statement points out that over the following two months, the NAV rose by more than 20%. The key contributors to underperformance came from a broad range of sectors and different types of business. Exporters and global facing companies were particularly hard hit. From a bottom up perspective, Welspun caused the biggest drag on performance. Welspun is one of the leading home textile companies globally and a leader in the US markets for homeware. Margins fell sharply on account of rising cotton prices (a key input), rising power costs and a fivefold increase in freight costs, with additional concerns over a potential US recession adding to the poor sentiment.
  • US Solar (USF) has sold an option over its 50% interest in the Mount Signal 2 solar project to MN8 Energy (MN8), a renewable energy business formerly known as Goldman Sachs Renewable Power LLC. Under the terms of the option, MN8 paid USF a non-refundable option fee of $1m and will have the option, for an initial term of six months extendable for a further three months by mutual agreement, to acquire USF’s 50% interest for an additional $52.2m. The total proceeds would imply a gross return of 11% per annum since USF announced the agreement to acquire up to 50% of Mount Signal 2 in December 2020.
  • Renewables Infrastructure (TRIG) says that the reversal of the planned increase in corporation tax has added about 5p to its NAV
  • LXI REIT (LXI) has pulled out of a £500m deal to buy a portfolio of Sainsbury’s supermarkets (details here) having not garnered the support of shareholders for an equity raise to part-fund the purchase “given the current stock market volatility”.
  • Supermarket Income REIT (SUPR) has bought a Tesco supermarket, an Iceland Food Warehouse and complementary non-grocery units in Bradley Stoke, Bristol, for £84.0m, reflecting a net initial yield of 5.6%. The 19.8 acre site includes a 74,717 sq ft net sales area Tesco supermarket with a 16-pump petrol filling station and 925 car parking spaces. The store is an online hub for Tesco, operating 20 home delivery vans and a dedicated Click & Collect facility. Tesco has operated at the site since the 1980s and through an extensive refurbishment, expanded the store in 2007. The site also includes an Iceland Food Warehouse and further complementary units providing convenience and health services with tenants including Boots, Greggs, Costa Coffee and Pets at Home. The Tesco store has an unexpired lease term of 14 years, with annual, upwards-only, RPI-linked rent reviews (with a 3.5% cap and a 0.0% floor).

We also have results from Tufton Oceanic

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