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Original-Research: Warimpex Finanz- und Beteiligungs-AG - from East Value Research GmbH
Classification of East Value Research GmbH to Warimpex Finanz- und Beteiligungs-AG
While the sale of Russian assets (in total 53,100 sqm) that was announced on October 31 led to a one-off loss of EUR 30.3m, we believe that the transaction is very positive for shareholders as it removes the biggest risk associated with an investment in Warimpex. Management now plans to fully concentrate on the development of its office projects in Poland (Cracow) and Germany (Darmstadt). Based on WXF’s equity position as of 30/09/2024, the stock is currently trading at a P/BVPS of just 0.4x. Given much lower business risk, an improving market environment for real estate companies and mostly long-term interest-bearing debt, we now recommend to BUY Warimpex’s shares with a new 12-months PT (50% NNNAV, 50% peer group) of EUR 1 (prev. EUR 1.60). Our new estimates reflect the sale of Russian assets, which in H1/24 made up c. 36% of Gross Asset Value and accounted for c. 41% of Warimpex’ total revenues. While the company’s net gearing remains high, its hotels and offices generate predictable cash flows. In its 9M/24 report, Warimpex shows revenues and profits excl. Russia and assets and liabilities from discontinued Russian operations of EUR 88m and EUR 63.6m respectively. Total revenues equalled EUR 15.7m (+13.2% y-o-y), whereby Investment Properties grew by 9.5% y-o-y and Hotels segment by 4.7%. Due to a remeasurement loss of EUR 5.9m and the loss from discontinued operations EBIT and net income declined to EUR -6m and EUR -42.8m respectively. At the end of September 2024, WXF had net debt (incl. discontinued assets & liabilities) of EUR 130.8m (30/06/2024: EUR 216m, 31/12/2023: EUR 210.3m) and equity (excl. minorities) of EUR 77.2m (30/06/2024: EUR 117.6m, 31/12/2023: EUR 121.9m). After the sale of 4 commercial buildings & 1 hotel in St. Petersburg as well as the MC55 office development project in Polish Bialystok, Warimpex now still has offices in Cracow, Lodz and Budapest, 1 hotel in Darmstadt as well as 3 office projects under development (Chopin & Mogilska IV in Cracow, West Yard in Darmstadt). While Chopin and West Yard already have a building permit, Mogilska IV is the least developed project. Construction work will start dependent on market conditions. You can download the research here: http://www.more-ir.de/d/31477.pdf For additional information visit our website: https://eastvalueresearch.com/ Contact for questions: Adrian Kowollik Email: ak@eastvalueresearch.com
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2043387 03.12.2024 CET/CEST
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