Secure Income REIT (AIM:SIR) - Share price, News & Analysis

Q: What is the Fair Price of SIR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SIR (£4.78) is trading below our estimate of [[fair value]] (£5.52)

SIR fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	0/6
Past Performance	1/6
Financial Health	1/6
Dividends	3/6

SIR Stock Overview

Secure Income REIT Plc ("SIR") is a specialist UK REIT, investing in real estate assets that provide long term rental income with inflation protection.

Rewards

Trading at 13.4% below our estimate of its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of 12.7% per year for the next 3 years

Interest payments are not well covered by earnings

Unstable dividend track record

Large one-off items impacting financial results

Secure Income REIT Competitors

UK Commercial Property REIT

LSE:UKCM

UK£1.0b

BMO Commercial Property Trust

LSE:BCPT

UK£823.5m

LXI REIT

LSE:LXI

UK£1.3b

Picton Property Income

LSE:PCTN

UK£502.0m

Price History & Performance

Summary of all time highs, changes and price drops for Secure Income REIT
Historical stock prices
Current Share Price	UK£4.78
52 Week High	UK£4.82
52 Week Low	UK£3.77
Beta	0.79
1 Month Change	2.25%
3 Month Change	4.25%
1 Year Change	26.79%
3 Year Change	19.50%
5 Year Change	38.35%
Change since IPO	123.36%

Shareholder Returns

	SIR	GB REITs	GB Market
7D	4.8%	1.6%	1.8%
1Y	26.8%	-3.7%	-7.3%

Return vs Industry: SIR exceeded the UK REITs industry which returned -3.7% over the past year.

Return vs Market: SIR exceeded the UK Market which returned -7.3% over the past year.

Price Volatility

Is SIR's price volatile compared to industry and market?
SIR volatility
SIR Average Weekly Movement	3.9%
REITs Industry Average Movement	3.3%
Market Average Movement	5.5%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: SIR is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: SIR's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2007	n/a	n/a	https://www.SecureIncomeREIT.co.uk

Secure Income REIT Plc ("SIR") is a specialist UK REIT, investing in real estate assets that provide long term rental income with inflation protection. The Company owns a £1.96 billion portfolio at the 30 June 2020 independent external valuation. With net assets of £1.25 billion and some £220 million of Uncommitted Cash held at 30 June 2020, the Company has been well positioned to provide support to its tenants through the Covid-19 pandemic while maintaining its strong financial discipline and balance sheet strength.

Secure Income REIT Fundamentals Summary

How do Secure Income REIT's earnings and revenue compare to its market cap?
SIR fundamental statistics
Market Cap	UK£1.52b
Earnings (TTM)	UK£199.60m
Revenue (TTM)	UK£122.40m

7.7x

P/E Ratio

12.6x

P/S Ratio

Is SIR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SIR income statement (TTM)
Revenue	UK£122.40m
Cost of Revenue	UK£600.00k
Gross Profit	UK£121.80m
Other Expenses	-UK£77.80m
Earnings	UK£199.60m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.62
Gross Margin	99.51%
Net Profit Margin	163.07%
Debt/Equity Ratio	66.6%

How did SIR perform over the long term?

See historical performance and comparison

Dividends

3.3%

Current Dividend Yield

43%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is SIR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SIR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SIR. This is calculated by dividing SIR's market cap by their current preferred multiple.
What is SIR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£1.52b

SIR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	18.5x
Enterprise Value/EBITDA	21.3x
PEG Ratio	-0.6x

Price to Earnings Ratio vs Peers

How does SIR's PE Ratio compare to its peers?

SIR PE Ratio vs Peers

The above table shows the PE ratio for SIR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	5.3x
UKCM UK Commercial Property REIT	4.4x	n/a	UK£1.0b
BCPT BMO Commercial Property Trust	5.4x	n/a	UK£823.5m
LXI LXI REIT	8.2x	-10.6%	UK£1.3b
PCTN Picton Property Income	3.5x	-40.5%	UK£502.0m
SIR Secure Income REIT	7.7x	-12.7%	UK£1.5b

Forward PE

Price-To-Earnings vs Peers: SIR is expensive based on its Price-To-Earnings Ratio (7.7x) compared to the peer average (5.3x).

Price to Earnings Ratio vs Industry

How does SIR's PE Ratio compare vs other companies in the GB REITs Industry?

Price-To-Earnings vs Industry: SIR is good value based on its Price-To-Earnings Ratio (7.7x) compared to the UK REITs industry average (7.8x)

Price to Earnings Ratio vs Fair Ratio

What is SIR's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SIR PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	7.7x
Fair PE Ratio	12.5x

Price-To-Earnings vs Fair Ratio: SIR is good value based on its Price-To-Earnings Ratio (7.7x) compared to the estimated Fair Price-To-Earnings Ratio (12.5x).

Share Price vs Fair Value

What is the Fair Price of SIR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SIR (£4.78) is trading below our estimate of fair value (£5.52)

Significantly Below Fair Value: SIR is trading below fair value, but not by a significant amount.

Price to Earnings Growth Ratio

PEG Ratio: SIR's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Secure Income REIT forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-12.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SIR's earnings are forecast to decline over the next 3 years (-12.7% per year).

Earnings vs Market: SIR's earnings are forecast to decline over the next 3 years (-12.7% per year).

High Growth Earnings: SIR's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SIR's revenue (1.3% per year) is forecast to grow slower than the UK market (4.1% per year).

High Growth Revenue: SIR's revenue (1.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if SIR's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Secure Income REIT performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-17.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SIR has a large one-off gain of £140.2M impacting its December 31 2021 financial results.

Growing Profit Margin: SIR became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: SIR's earnings have declined by 17.8% per year over the past 5 years.

Accelerating Growth: SIR has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: SIR has become profitable in the last year, making it difficult to compare its past year earnings growth to the REITs industry (129.6%).

Return on Equity

High ROE: SIR's Return on Equity (14.6%) is considered low.

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Financial Health

How is Secure Income REIT's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SIR's short term assets (£201.2M) do not cover its short term liabilities (£415.4M).

Long Term Liabilities: SIR's short term assets (£201.2M) do not cover its long term liabilities (£577.3M).

Debt to Equity History and Analysis

Debt Level: SIR's net debt to equity ratio (52.1%) is considered high.

Reducing Debt: SIR's debt to equity ratio has reduced from 129.4% to 66.6% over the past 5 years.

Debt Coverage: SIR's debt is not well covered by operating cash flow (12.4%).

Interest Coverage: SIR's interest payments on its debt are not well covered by EBIT (2.2x coverage).

Balance Sheet

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Dividend

What is Secure Income REIT current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.31%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: SIR's dividend (3.31%) is higher than the bottom 25% of dividend payers in the UK market (1.87%).

High Dividend: SIR's dividend (3.31%) is low compared to the top 25% of dividend payers in the UK market (5.16%).

Stability and Growth of Payments

Stable Dividend: SIR has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: SIR's dividend payments have increased, but the company has only paid a dividend for 6 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (43.4%), SIR's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (44.9%), SIR's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

8.1yrs

Average board tenure

CEO

Secure Income REIT has no CEO, or we have no data on them.

Board Members

Experienced Board: SIR's board of directors are considered experienced (8.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31