DNB Markets - MaxFastigheter: Attractive 39% NRV discount

Wed, Nov 04, 2020 08:41 CET

We see the lack of rent discounts in Q3 as a sign of tenant-base strength, as well as confirmation of the asset book value by the external appraiser, as the value change was unchanged in the quarter - despite the pandemic. Postponing its growth target by one year (asset value of SEK5bn at end-Q2 2022) makes sense to us in the current market, and we still see upside potential from its growth strategy. We have lowered our 2021–2022e EPS by c5% after updating our revenue and net interest estimates, but reiterate our fair value of SEK31–42/share.

No rent discounts in the quarter and flat value revisions indicate strength. Q3 EPS adj. was SEK0.67, 16% below our estimate of SEK0.8. The deviation was explained by a SEK2m revenue miss (or 5% below our estimate) due to move-ins to ongoing projects being delayed until Q4. The vacancy rate rose from 5.8% to 6.8% QOQ, explained by a terminated contract. Asset value changes were minimal (+SEK3m or 0.1% QOQ), while our estimated EPRA NRV/share was SEK45.8, an increase of 1.7% QOQ.

Growth focus unchanged, but timeframe delayed. Due to Covid-19-related market changes, MaxFastigheter postponed its growth targets (asset value of SEK5bn versus SEK2.75bn currently and a listing on the NASDAQ Stockholm main market by end-Q2 2022 rather than Q2 2021). The updated timeframe does not affect our estimates or fair value range, and we still see the advantages of growth, as it should lead to segment and tenant diversification, economies of scale, and increased cash earnings per share.

EPS forecasts lowered. After updating our revenue, vacancy and net interest forecasts, we have cut our 2021–2022e EPS by c5%. Our forecasts also now reflect the recent SEK44m acquisition in Örebro, at an attractive net yield of 8.5%.

We find the 39% EPRA NRV discount attractive. The stock is trading 39% below its EPRA NRV (peer group at a 16% premium) and at 9.5x 2021e P/FFO. Our fair value range of SEK31-42/share suggests a P/FFO of 10–13.5x on our 2022e, while peers Cibus, NP3 and Nyfosa are at 14.7x (based on consensus).

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DNB Markets - MaxFastigheter: Attractive 39% NRV discount

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