Eastnine: Strong op. performance and large value uplifts - ABG

Best net leasing in company history (since 2020) Net operating income (-1%) hurt by energy costs 2.1% property value uplifts and +81% to MFG Income from property management +3% vs. ABGSCe As alluded to in its June 28 press release, Q2 saw strong net leasing (~EUR 1.8m, ~EUR 1.1m TTM), driven mainly by deals in Uniq and much less cancellations (~EUR -0.6m in Q2’21). Rental income amounted to EUR 7.4m (5.4m), compared to our forecast of EUR 7.2m. Net operating income was EUR 6.6m (4.9), -1% relative to our estimate of EUR 6.6m, and the surplus ratio fell to 89% (91% in Q1) due to higher energy costs. Income from property management amounted to EUR 3.1m (2.8 m), 3% above our forecast of EUR 3.0m. CEPS is 13% below ABGSCe due to current tax reported in Q2. Avg. rent/sqm/year amounted to EUR 183 (185 in Q1’22 and 180 in Q2’21). The occupancy rate came in at 91.5% (91.1% in Q1). The average interest rate was 3.0% (2.9% in Q1’22) and the average interest maturity 2.2 y (1.6 y in Q1’22).

EPRA NRVPS +19% q-o-q (adj. for DPS) to SEK 207 The value of Eastnine’s holding in the Russian retail group Melon Fashion Group (MFG) by EUR 63m or 81% from Q1, primarily from unrealised value changes. MFG has performed very well since the beginning of the pandemic but the extent of this value revision is to us somewhat surprising. Property value changes in Q2 amounted to EUR 10m (1.5m) or 2.1%, also above our forecast (+0.4%). The valuation yield came up 0.1pp q-o-q but down 0.2pp y-o-y, to 5.6%. EPRA NRVPS rose 20% q-o-q and 31% y-o-y (adj. for dividends), now at SEK 207. Net LTV was ~52% vs. ~45% in Q1’22. The isolated Q2 numbers would imply estimate revisions of c. -5% on CEPS and c. 20% on EPRA NRV.

~50% discount to EPRA NRV - 3 y average is ~15% EAST trades at 12x ’23e P/IFPM and a discount to reported EPRA NRV of 49%. These metrics are ~15% above (P/IFPM) and ~25% below (P/EPRA NRV) the average of peers (CAST, DIOS, FPAR and WIHL) EAST’s 3y averages stand at 33x and a discount of 14%. On ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eastnine/Equity-research/2022/7/eastnine---strong-op.-performance-and-large-value-uplifts/