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(ShareCast News) - In the Sunday Times' 'Inside the City' column this week, Aimee Donnellan focussed on embattled shopping centre owner Hammerson, whose shares had been out of favour for "some time" as investors watched the decline of malls globally - particularly across the pond.
She questioned whether the sell-off had gone too far, however, noting that Friday's closing price of 513.2p - a decline of 8% since the start of the year - represented trade at nine times earnings.
Hammerson's £4bn market cap also represented a discount of around 35% to the net asset value of its portfolio, which does include some prime locations including north London's Brent Cross and the Bullring in Birmingham.
The FTSE 100 stalwart also held a 46% share in lucrative outlet centres through a joint venture with Value Retail, which included the ever-popular destination for tourist shoppers, Bicester Village in Oxfordshire, and Dundrum near Dublin.
It had managed to secure record high lettings on its portfolio in the first half with a million square feet across 228 leases, Donnellan pointed out, adding that chief executive David Atkins was expected to deliver dividends in the 6%-8% range next year.
"Although many retailers are trimming their shop chains, they are gravitating towards bigger, destination centres," Aimee Donnellan quipped.
"Those sites belonging to Hammerson typically fit that bill."
It wasn't all plain sailing ahead, however, with concerns floating around the effect of Brexit, the continued boom in online shopping, and a campaign led by the Bank of England to reduce reliance on consumer debt.
Hammerson was also having to spend time and cash to ensure its estate remained appealing to consumers, giving up more retail space to leisure-focused tenants, including bowling alleys, cinemas and restaurants.
Still, the slump in the share price and its valuation was overcooked, Donnellan claimed, highlighting that the company's exposure to EU countries - in particular, France and Ireland - giving it a buffer to Brexit.
It was also keeping on top of its finance, carefully refinancing its more expensive loans, having secured a £360m line-of-credit in April with a group of 14 banks.
That move, Donnellan said, slashed its interest payments by 40%, and it followed a similar £420m credit deal struck in 2016.
"Maintaining prime sites such as Bicester, along with careful debt management, should shield Hammerson from any lumps and bumps in the economy," Donnellan concluded.
Over in the Mail on Sunday, Joanne Hart gave her attention in 'Midas' to beauty and cosmetics manufacturer and supplier Swallowfield, saying its current share price of 337.5p should make "strong progress" over the next few years.
It's a firm with a long history, having started as a high street chemist in 1876 and growing to become a supplier to some of the most well-known beauty brands, although it struggled through the financial crisis last decade when its management team was faced with serious pressure to cut costs.
That led to the resignation of its chairman and chief executive in 2013, followed by the hiring or Brendan Hynes from Nichols and Chris How - a Colgate-Palmolive and PZ Cussons veteran - into those roles, respectively.
Between them, Hart said Hynes and How focussed on the company's strongest areas - aerosols, cosmetic pencils and "hot pour" products, which include lipstick and roll-on deodorant.
Those three product areas are complex in their manufacture, which leads to "more resilient" profit margins, with customers less likely to shop around given the difficulty for competitors to move in the market.
At the same time, the AIM-traded firm started developing its own brands, as well as buying a number of already-successful UK-focussed marques, leading to it to now look overseas for expansion opportunities.
There was already a significant opportunity to move in France, according to Hart, where women traditionally would not dream of using non-native beauty products, while millennials saw British products as somewhat "hip" as they looked beyond the Parisian cosmetics houses.
Last month, Swallowfield reported that its pre-tax profits had more than doubled to £3.6m from £1.6m, and increased its dividend by 68% to 5.2p.
The professionals were keen on the number too, with Hart reporting that brokers were picking profit of £5.1m next year, with the dividend set to improve 19%.
One of its big British brand acquisitions was of the group Brand Architekts, which was financed in part by a share issue, bringing in a number of what Hart called "impressive" shareholders - including the now 11% chunk held by George Soros.
She said Soros and other big names were attracted by the growth prospects of Swallowfield, with the company maintaining strong relationships with global brands in a bid to increase sales with them and lure other customers.
On its own-brand side, Hart noted that the company was well-positioned to benefit from a number of trends, including increasing consumer concerns about the provenance and sustainability of their products, as well as trends towards smaller and "quirkier" brands.
"Swallowfield shares have done well since Hynes and How took the helm but, at 337.5p, there's still lots of potential and Soros's presence on the share register is reassuring," Hart concluded.
"Buy and hold."
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