Is Abacus Storage King a buy, sell or hold after its first half results?

The out of home storage market has boomed in recent years, but that boom has happened largely in private markets which are not open to ordinary retail investors.

So for those looking to park some money in the sector, Abacus Storage King Ltd (ASX: ASK) is pretty much the only option at the moment.

The company delivered its first half results this week and we’ve had a look at what the analysts are saying following that event.

But first let’s have a look at the results.

Solid set of numbers

Abacus on Monday said that it had a “solid” first half, “with embedded growth upside”.

The company delivered a statutory profit of $71.1 million, up 4.8% on the same half the previous year, and will pay an interim dividend of 3.1 cents per share, equal to that paid for the same period last year.

The company’s occupancy rate was 90.5%, down 20 basis points, while gearing of 31.9% was within the target range of 25-40%.

The company also reaffirmed its guidance for full year distributions of 6.2 cents per share.

On the outlook, managing director Steven Sewell said it was looking positive.

He added:

HY26 demonstrates the resilience of the business model and the strength of the operating platform, which is becoming stronger as we continue to advance our use and understanding of the revenue management system. As we continue to evaluate a potential internalisation of management, our focus remains on disciplined execution, strategic growth and operational excellence.

What do the brokers think?

The analysts at Bell Potter and Shaw and Partners both had a look at the result, and each are predicting some modest share price upside.

Bell Potter has a buy rating on the shares and a price target of $1.70 compared with $1.53 currently.

They added that further growth should be on the cards:

We continue to like ASK on a sector relative basis as the sole way to gain exposure to Australian self-storage and, per our recent initiation, there continues to be a disconnect between listed-market storage valuations and private markets. As Australia’s self-storage sector continues to mature and institutionalise we expect to see further valuation growth. We acknowledge the near term cost challenges impact ASK but are equally conscious of the multiple upside catalysts and pronounced valuation disconnect of this vehicle.

Shaw and Partners has a hold rating on the shares and price target of $1.65.

They said the business “remains vibrant” and the company had plenty of capacity for acquisitions and developments given its gearing ratio.

They added that there could be a modest uplift to the valuation should the company go ahead with internalising its management vehicle, Abacus Group (ASX: ABG).

The post Is Abacus Storage King a buy, sell or hold after its first half results? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.