Update: FairPlay ($6F3:BU) and Yuri Gagarin ($4PX:BU)

First a disappointment, FairPlay, the REIT I wrote about, posted lower-than-expected distributable income for the year – BGN 1.9m against a December forecast of 2.45m and a May forecast of 3.7m.  Being off by 50% midyear and by 25% with 15 days to go is a yellow flag for management, in my book.  I don’t like rosy forecasts.  I’ve always found “under-promise and over-deliver” the better alternative.

It turns out that the dividend will actually be lower than last year despite the promised 50% increase.  This, together with the lack of material revaluations, casts doubt over management’s assumptions and estimations.

Still, the BGN 0.0306 dividend presents a yield of 11%.  However, the number of contracts signed continued to decline to 109 for 2012 (136 for 2011; 164 for 2010).  The average price per square meter for all apartments sold came down 5% – 2,080 BGN/sqm vs 2,200 last year.  Revenue is down 13% from last year.

On the asset side, the company still has BGN 1.22/sh book value trading for 0.28.

In other news, the St. Marina holiday village appears to have been built on protected land, under EU Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora.  From the proof of entitlement pictured in the article, it appears that the company is paying 0.21 BGN/sqm or a little over 25,000 BGN/acre.  I don’t know if this is a fair price.  It doesn’t sound like much.  But the more important matter is whether the deal is legal.  The article was written in relation to an ongoing investigation into what is colorfully called Dunegate after a scandal with the questionable sale and levelling of protected dunes along the sea shore.  Such matters rarely get prosecuted and even more rarely – fined.  However, it is an election year – anything is possible.


The other peculiar news concerns Yuri Gagarin, the manufacturer of cardboard and paper packages, and cigarette filters written-up here.  Since declaring a 45% reduction in YoY sales in November, the price has gone up 50%.  There haven’t been any other news after this.  Go figure.