DNB Markets - MaxFastigheter: Set for strong IFPM growth in 2021
The Q4 report was solid, and showed continued resilience despite Covid-19. We have raised our fair value range to SEK37–44 after lifting our 2022e EPS by 2% following recent acquisitions, as well as trimming our valuation yield following tightening credit spreads in the capital markets. We expect a strong improvement in IFPM (income from property management) per share, with 20% growth in 2021 (from 4.5% in 2020), driven by project completions and acquisitions.
Q4 results in line with our forecasts, but asset value gains better than expected. Rental income remained resilient despite Covid-19 (2020 rent discounts amounted to 1.1% of turnover), coming in 2% above our forecast. However, EPS adj. was 3% below our estimate due to somewhat higher operating expenses, while FFO was 23% below due to, we believe, what was a one-off uptick in payable tax. Project developments led to higher asset value gains than we expected, at SEK31m, or +1.1% QOQ, while EPRA NAV (NRV) per share grew by 4% to SEK48. As expected, no dividend was proposed for 2020, with management saying it will focus on its growth target (SEK5bn asset base by Q2 2022).
2022e EPS raised by 2%. We have made only minor estimate changes following the results – factoring in recent acquisitions and updating our interest rate forecasts. We see some upside risk to our estimates, as we do not include the ongoing developments due to limited data on the remaining investment. However, we have raised our NAV forecast based on our expectation of further asset gains in ongoing developments.
M&A key to reaching its financial targets. MaxFastigheter’s EPRA NAV (NRV) per share rose by 10% in 2020 (12% annual target), while its IFPM per share was up by only 4.5% (again, its annual target is 12%). However, we expect a strong improvement in 2021 – we forecast a 20% increase in IFPM/share following project completions and acquisitions. We see cSEK300m available investment capacity for M&A.
Fair value range raised to SEK37–44, following our positive estimate revisions and a trimmed valuation yield, supported by tightening credit spreads in the high yield market. The stock is trading at a 22% EPRA NAV (NRV) discount and at a 2021e P/FFO of 12.4x, while the peer group is at 14x.
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Niklas Wetterling | DNB Markets | Equity Research | Real estate & Construction
DNB Bank ASA
Regeringsgatan 59 | Stockholm | Sweden
E-mail: niklas.wetterling@dnb.se | www.dnb.no