Trianon: Operationally stable – hurt by energy costs - ABG

Net operating income -7% vs ABGSCe IFPM in the earnings capacity up by 6% Occupancy rate up 0.6pp q-o-q Income from property management -9% vs. ABGSCe Rental income came in at SEK 171m (153m), compared to our forecast of SEK 173m. Net operating income was SEK 107m (101m), -7% vs. ABGSCe. Higher energy prices impacted the NOI margin, which affects residential-focused property companies to a higher degree vs commercial names, as rent per sqm in general is lower and commercial companies can pass on increased cost to tenants. Income from property management (IFPM) amounted to SEK 66m (66m) relative to our estimate of SEK 73m. IFPM per share in the earnings capacity came up 6% from the previous quarter. Net leasing summed up to SEK 1.4m (1.8m) in Q2 and SEK 5.2m (9.6m) TTM, and the occupancy rate increased to 95.7% (95.1% in Q1’22 and 95.3% in Q2’21). Trianon renovated 18 (28) apartments in Q2 and 61 (68) in H1’22, while it targets 200 apartments for the full year.

EPRA NRVPS +6% q-o-q (adj. for DPS) to SEK 37.3 Value changes amounted to SEK 37m (208m) or +0.3%, we expected +0.4%. The valuation yield was flat q-o-q (-0.6pp y-o-y) at 3.9%. The yield in the residential segment was flat q-o-q while it increased by 0.2 and 0.1pp in the community service and retail segments, respectively. EPRA NRVPS increased 6% q-o-q and 36% y-o-y (adj. for paid dividends) to SEK 37, in line with our forecast of SEK 37. Net LTV was 56.1% compared to 54.6% in Q1’22. The average interest rate decreased to 1.8% (1.9% in Q1) and the interest maturity decreased to 1.4y (2.0y in Q1). The isolated Q2 numbers would imply estimate revisions of -5% on CEPS, while 0% on EPRA NRV. However, we note that CEPS (IFPM less tax/share) in the earnings capacity is up by 6% q-o-q.

Trades ~30% below its 4y P/IFPM average The share is trading at 18x LTM P/IFPM and a 28% discount to reported EPRA NRV. These metrics are well below its 4y averages (26x & 24% premium). Compared to peers, current multiples are ~10% and ~5% ab ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/trianon/Equity-research/2022/7/trianon---operationally-stable--hurt-by-energy-costs/