YSP: Discount to Net Asset and Turning the Corner

Yep, it's fine if you can keep selling property, buying more property and increasing the asset value at the same time.

But basically the net assets have increased £2m and they are going to give that amount to shareholders in a divi. That's fine but wouldn't you want the company valued at a bit over the assets if that's what they are doing?

For instance - what happens if they do a bum deal or property slows and they can't pay 10-20p as a divi and can't pay a divi because the assets haven't grown? You have a business with £9m assets and a market cap of £29m. I would have thought these would fall to the NAV of £8m possibly.

I could make money by selling a kidney, then an eye etc. I'd have good income but what was left wouldn't be as valuable.

If the divi was coming from operations like rental and they could pay that out without eroding the assets then yes, I could perhaps understand the valuation at this level. But the current way of working the earnings are sustainable at the cost of the asset base eventually imo.

Don't get me wrong, YSP have done a great turnaround job and it's now well run. I just can't see how the valuation got here (for instance the share price rose 80p from October) on the basis you get a 10p interim divi.

Well done and good luck if you're still holding - I was out around a quid after making 200% swift and am not bitter, just voicing a bit of caution having been here most of last year and suggesting you think about the valuation.

Good luck all.

CR