Opinions
Andrew Pink
StorageVault Canada
SVI-T
TOP PICK
Jan 08, 2024
$5.470
Stock price when the opinion was issued
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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
SVI operates in a structure relatively similar to a REIT but is much more growth-focussed. It needs to utilize debt in order to be able to grow its portfolio of assets which it rents out. It has also grown primarily via acquisition. The rising rate environment has created cost pressures, however we do think the outlook is positive. As Canada has already begun cutting rates, we think SVI stands to benefit from lower interest expenses (bottom-line expansion) and being able to isse more debt to finance growth (top line expansion). The industry is capital intensive so while high debt is a risk, it is somewhat unavoidable. We like the outlook for SVI.
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An essential service, and SVI is the only public storage company in Canada. Not a REIT. Have strong organic growth, but also buy companies with a good track record in a fragmented industry in Canada. So there are lots of opportunities to buy smaller companies. They target 4-6% same property growth. Lease terms are typically 1.5-2 years, so prices can be reset. They keep capital costs very low, and are diversified geographically. Defensive. Is 16% below February 2023, so there's room to run.
(Analysts’ price target is $5.91)