Fastator: No drama in Q2 - ABG

Estimate changes driven mainly by accounting changes... …as well as lower updated interest assumptions 5.5x EV/EBIT ‘22e and a hefty NAV discount Deconsolidation main explainer for deviations Fastator’s Q2 report showed EBIT of SEK 255m, well above ABGSCe (+47%) due to a higher-than-expected result from associated companies and joint ventures. This was near-exclusively driven by an accounting effect from deconsolidating Företagsparken, its largest holding corresponding to ~50% of NAV, which decreased its cash position but improved its equity ratio and net LTV. Fastator still owns >70% of Företagsparken but its deciding influence fell below 50% in Q2, causing the deconsolidation (effective from 28 June, hence only a minor impact on Q2’s P&L and CF statements). Structural growth in Företagsparken previously drove sales in our estimates, meaning the deconsolidation cuts our estimates for sales, (partly) EBIT and (partly) EPS in ’23-24e. The other major factor behind our lowered EBIT and EPS estimates are raised funding costs and lowered property value uplifts (further explained below).

Rate assumptions updated in line with Stibor 3m changes We have increased Fastator’s interest costs based on the higher Stibor 3m now (~1.4%) vs. our latest update in May (~0.5%). In addition, we have downwardly revised our assumptions for property value uplifts, although most of the declines here stem from the deconsolidation of Företagsparken. On operations, we note that Företagsparken improved the net operating income in its earnings capacity by 15% q-o-q, and its NOI margin by 10bps to 74%. Moreover, we note that Point Properties reached a letter of intent with Motala municipality in May regarding a university building project of 2,500 sqm. Also, the divestment of SBK Svenska Bostadskompaniet was completed in July and Fastator will book a cash contribution from this transaction of SEK 140m in Q3.

Versatile business model w/ track record Fastator is valued at 5.5x ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/fastator/Equity-research/2022/8/fastator---no-drama-in-q2/