Questor: Harworth is a long-term bet on a changed post-Covid world and is worth holding

A prospective dividend yield of 1pc may not set everyone’s pulse racing but the fact that Harworth is confident enough to restore payments is taken as a good sign by this column.

The land and property regeneration specialist cancelled its final dividend for 2019 but declared a payment of 0.334p a share alongside last week’s first-half results.

That was some 10pc higher than its distribution at the same time a year ago, encouraged by strong rent collection across the industrial assets, good progress in this year’s asset disposal plan and a mere 5pc drop in overall net asset value (NAV) to 148.6p a share, thanks to active management of the portfolio.

The company’s business model still intrigues. Harworth’s long-term focus remains on sites that are specially designed for houses or industrial and logistics facilities in the North and the Midlands. Such a strategy potentially provides solutions to many of the biggest trends and challenges that could result from the pandemic.

Harworth’s assets may be a good play on any shift away from living in larger conurbations, on demand for carefully designed office space that can be reached without the need for a lengthy commute and on the ongoing rise of online shopping, which will in turn drive demand for more warehouses and logistics hubs.

These are all long-term themes and the firm is therefore best suited to patient investors. The shares have fallen slightly since our initial analysis in June but the balance sheet means we can afford to wait. Net debt is limited, the loan-to-portfolio-value ratio is low at barely 12pc and the interim interest bill of £1.8m modest compared with rental income.

And so we wait, in the knowledge that the shares trade at a 37pc discount to their stated NAV. This hopefully builds in some protection against any wider market volatility, which the ongoing pandemic, fragile economic recovery and developments regarding Brexit could easily spark. Harworth still offers long-term potential. 

Questor says: hold

Ticker: HWG

Share price at close: 94p

Update: Resolute Mining/Centamin

Sometimes this column really does think that gold miners are more trouble than they are potentially worth.

Our view on gold is still being borne out, as the precious metal trades at around $1,900 an ounce, drawing support from ever more frantic calls for fiscal stimulus (and hence higher government budget deficits) from the Federal Reserve, the European Central Bank and now that traditional bastion of financial probity, the International Monetary Fund.

Yet our own mining picks remain a source of frustration and this column would understand if investors were to dodge the vagaries of picking individual miners and seek broad-brush exposure to a basket of stocks through exchange-traded funds such as VanEck Vectors Gold Miners and VanEck Junior Gold Miners.

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Centamin has encountered the latest in a string of operational setbacks at its Sukari open pit mine in Egypt. Staff safety is quite rightly being put first but this means output will undershoot expectations. The shares have plunged on the news, wiping out a chunk (but not all) of our paper profit.

We shall just have to sit and suffer, and wait for expansive fiscal spending plans from whoever wins next month’s American presidential election (and no doubt from a good few more political leaders worldwide) to remind investors of gold’s safe haven status at a time when paper money is being sprayed around like confetti.

The same strategy must apply to Resolute Mining, whose shares tumbled after the military coup in August in Mali, home to the firm’s Syama mine, where management has also faced industrial unrest. Although further strike action has been averted, time and output have been lost, even if daily operations have not been affected by local politics.

As a result, John Welborn, the chief executive, has trimmed forecast gold production for the year to a range of 400,000-430,000 ounces (from 430,000) with an “all-in sustaining cost” of $980-$1,080 an ounce, rather than the $980 previously forecast.

Both miners still have the potential to shine despite the near-term problems. 

Questor says: hold

Ticker: RSG, CEY

Share price at close: 55.6p, 164.4p 

Russ Mould is investment director at 
AJ Bell, the stockbroker

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