I promised an occasional set of suggestions on undiscovered and undervalued ofex stocks. I said there were still a few astonishing bargains over there and in my view this one fits the bill admirably. (my first suggestion Millbrook is up after two new partnerships and a nice contract win.)

Before i go any further, if you do not like property stocks, look away now! Let's not have a debate on the delights or otherwise of a property crash. i think you as investors have your views and are pretty clued up on the arguments for and against, but suffice to say, if you think commercial property will tumble then this share is not for you.

The stock, then is GSC Property. I hold. GSC has a portfolio worth 43 million plus cash of just under 5 million, after a recent sale. Repayments are fixed over 25 years at around 6%, totalling about 37 million. So nav is over 10 million and the nav is 101p a share. The shares are trading at 55-60p (market cap 5.75 million, nearly covered by cash!) a 40%+ discount to nav and as i said in the headline are profitable.

So why else is this so attractive? It buys on the theme of covenant, rather than location. Among the properties they own are a banking hall in Essex and a drive through in Birmingham. 90% of their customers are top 350 UK companies and or government. They are due for a revaluation of their portfolio soon, (likely to be up if the market is any indicator) and rent reviews should add to profits. The nearest company I can find is Aim listed PHP which is trading at a 5-10% Premium to nav. That would put GSC on 110p a share. Even if you think a discount is more apt however a 10-15% discount would see the shares at 85-90p which i consider to be fair value for the short term.

Oh they even pay a dividend of over 1p a share.

Strong Buy.

GSC is certainly a stock which will benefit from competitive mms and as i think it is a long term hold (nice to come across a long term investor 8ball btw these days,) we will see liquidity improve.
GSC is just a lovely stock to tuck away at such a generous discount.

hawick.

Looks good.

I got a copy of results from the company today.
85% family holding, so not a lot of stock out there.

The price is moved up as I read results.
I have not tried but suspect you would need to pay 60p plus.

Wynnstay is local to me and you would be surprised who you bump into down the pub.

I did the same as you, find an AIM listed company as close to the OFEX one you like and compare.
I was lucky as NWF is identical to Wynnstay.

Back to GSC....

I did ask if the company sold shares direct, alas No.

Hi 8ball. I added to my holding on Friday but wasn't able to get inside the spread.

Well done, good to see people properly doing their own research (too many pay lip service and buy just on a tip IMHO!). Only around 1,500,000 in free float so my 20k is comfortably over 1% of that! I would like to see more liquidity, but as it is for the long term it doesn't bother me with competitive mms coming on board and the hope of an AIM move anyway in time. Nothing is one way of course but think Wynnstay is excellent bet still btw.

GSC nice uncomplicated stock with excellent upside IMHO. As I said good luck whatever you decide!

I think in 2 years time wynnstay will be 2.50 a share.
Thats after the 4-1 split.

Do you think we will see a rights issue on GSC in the future? as they appear to want to grow.
Also am sure they would like to reduce the 85% family holding.

Hi 8ball. I don't think they would go for further growth this year as they have a lot of investments to settle down, rent reviews etc to deal with and I am certain from speaking to them they would want to see the shares much closer to nav before considering a fundraising.
There will come a point, hard to say when, that they probably will go for growth (and that would be good of course for us as investors) and then a fundraising becomes possible - my guess, and that is all it is - would be the second half of next year - but remember they have tripled the size of the company recently.
Incidentally for one of my tranches i paid 63p and would not hesitate to do so again if they stay round this level, when I have funds available in the new tax year.
The Directors have made 5% of their holdings available to Jenkins immediately on demand (normal for an ofex introduction stock) and hope to get institutions in over the next twelve months.

Nice to see Wynnstay at year high despite going ex-div!
No need to answer, was just wondering if you got a few GSC? (Incidentally when I spoke to GSC they promised not to forget new investors if they wanted to participate in any future fundraising).

Anyone else here interested/taken a look at GSC?

You should! :)

Been reading your notes and yes apart from i'm a new trader in shares & haven't bought ofex yet!! not so easy to find info

Hi amberjane, welcome to the 'sharegame'!! Thanks for reply.
As a start point www.ofex.com It is exactly like trading any other shares though they can be illiquid (ie difficult to buy or sell in big numbers - usually over 1000 pounds is hard to sell all at once) and not all brokers trade ofex yet, though most are now doing so.

GSC, in my opinion, is not a short term investment - 12-18 months minimum. Good luck if you have a go!

Thanks, I'll consider.

Hi Hawick.

May take a small flutter on GSC tomorrow.
Will let you know what price I get.

Wynnstay is now 7 and gained a few shares via script divi too.

Good luck if you do 8ball and amberjane. I can safely say we are on the same side and i will be holding mine for a long time!
One thing i like is that the downside is very limited, which is more than I can say for most stocks - it would take a property crash of mammoth proportions for this one to be out of the money. Also their customer profile means bad debts are almost guaranteed never to be a problem.

Just a thought, a 40% discount to nav is deceptive, in that to reach nav the shares (around 60p) would have to rise nearly 70% to reach nav (102p).

I got some at 62p today.
Got them rather easy too, not sure if the price was that good but when it get to 1 who cares.

Welcome on board 8ball. Glad you had npo probs! Cracking little number this one.

Hawick

Is the 6.2% loan interest only?

Also when do you expect full results.

It is just like a mortgage 8Ball. Results due - interims - end September.

So it will be cleared at the end of 25 years?

Only in theory (though of course it won't be longer). Of course they will buy and sell properties in that time and hopefully make profits on the rent as well as the properties! The customer base is particularly stong too - and they should be able to pay us nice divvies along the way. I don't envisage holding for the full period somehow - though neither do i see it as a short term investment - and i am sure they will grow along the way!

Repayments will be about 2.3 million per year.
So we need to have an income from rent of at least 3 million.
Providing this is achieved I don't see anything to worry about.