Sparkassen Immobilien BUY (unchanged) Target: Euro 8. (unchanged) 3 Sept 21 Price (Euro) 5.2 52 weeks range 6.2 / 4.36 Key Data Country Austria Industry Real Estate Market Segment Prime Market ISIN AT65225 WKN 92388 Symbol T1L Reuters SIAG.VI Bloomberg SPI:AV Internet www.sparkassenimmobilienag.at Reporting Standard IFRS Fiscal Year 31/12 Founded 1986 IPO 1987 Market Cap (EUR million) 354.2 Number of shares (million) 68.1 Free Float (approx.) 65% Free Float MarketCap (Euro million) 23.2 CAGR (EBIT profits 9-12e) 34.3% Multiples 29 21e 211e 212e MarketCap/ Total oper. revenues 2.8 2.3 4.1 1.7 PE-Ratio -4.5 15.8 6.8 5.8 Dividend Yield.%.% 5.8% 7.7% Key Data per Share (Euro) 29 21e 211e 212e Earnings per Share (EpS) -1.15.33.77.89 Dividends per Share (DpS)...3.4 Book Value per Share (BVpS) 7.3 7.36 8.13 9.2 Financial Data (Euro ') 29 21e 211e 212e Revenues 153,555 182,962 214,149 23,912 Rental income 87,553 18,391 13,52 142,248 Net revaluation result -97,238-3, 27, 3, Operating cash profit (EBITDA) 53,275 9,546 16,839 117,288 Operating Profit (EBIT) -53,76 79,313 124,23 136,897 Pre-tax profit (EBT) -77,456 25,763 61,253 71,797 Net profit after minorities -78,559 22,371 52,322 6,796 Shareholders' Equity 479,3 51,374 553,676 614,444 RoE after tax -14.9% 4.6% 9.9% 1.4% Financial Calendar SRC Forum Financials & Real Estate 21 3Q 21 report Main Shareholders Tri-Star Capital Venture Ltd. 11% Vienna Insurance Group ~ 1% Erste Bank group 9% Analysts Internet September 14, 21 November 25, 21 Stefan Scharff, CREA André Hüsemann, CREA Fon: +49-()69 4 313-79 and -8 scharff@src-research.de andre.huesemann@src-research.de www.src-research.de www.aktienmarkt-international.at Doubling the 1H profit 2Q weaker than 1Q steep rise in Cash Flow to come On 31 August commercial and residential real estate player Sparkassen Immobilien presented its 1H report. The first half of the year was fairly positive and delivered a steep increase of revenues from Euro 73.5m to Euro 79.4m (+8%) and also EBIT from Euro 23.8m to Euro 3.1m (+26%). Looking at net profit after minorities it even doubled from Euro Euro 3.2m in 1H 29 to Euro 6.2m in the first half of 21. Looking at the operating performance the first quarter EBIT and EBITDA were higher than in the second quarter as Sparkassen Immobilien sold some properties in the second half of 29 and at the beginning of 21 which did not contribute to top-line for 2Q. Furthermore there were some additional expenses for the opening of Serdika and Sun Plaza (opening ceremony,fees for real estate brokers) which brought down the EBIT and EBITDA. EBIT was Euro 15.8m in 1Q 21 and came back to Euro 14.3m in 2Q 21, the pre-tax profit even shrunk from Euro 4.5m in 1Q 21 to now only Euro 2.5m in 2Q. As the rental income rose from Euro 21.9m in 1Q to Euro 26.3m in 2Q and hotel business also picked up with higher occupancy in the first half of 21 we are quite optimistic for the firm to translate the higher top-line quickly into higher operating profits for the second half 21 without additional one off items. Looking at the trading side, the picture was descent as trading volume was more than doubled from Euro 24m to approx. Euro 58m. After there was no significant net profit from trading last year s Immo now reported a net trading profit of Euro 2.6m. At the beginning of 3Q the firm sold another office property in Vienna with a very good double-digit margin. That makes us optimistic for more deals to come soon. With regards to the revaluation side which severely dampened the 29 P&L, the net revaluation loss of only Euro 1.7 in the first six months was very small. As Germany and Austria even showed shrinking yields and thus a positive revaluation result the Serdika center contributed approx Euro 5m to the revaluation result. All in all the story is the same as after our 1Q update. The company has a good top-line growth which will accelerate even more as almost all developments are finished or will be finished within next months. The cash flow will more than double from 29 to 211 to > 1m Euros. Buy confirmed as we expect the good share price development since June to continue. 8 Euros target price also affirmed.
Strengths SWOT Analysis The firm has a well diversified portfolio with a total of more than 25 properties and a rental space of ~ 1,4k sqm amounting to a value of Euro 1.9bn. The properties are located across seven countries. A focus is on Germany and Austria while the other countries are located in CEE and SEE, thus geographical diversification is relatively high. Furthermore the portfolio is well diversified in terms of its type of use. Residential, office, retail and hotels are covered thus most major types of use are provided. In addition, all shares of each sector are well balanced. However we assume that this kind of portfolio will attract more the general equity investors than specialized investors that might be more focused on Pure-Plays (only residential or only commercial). Weaknesses Opportunities Threats 2 SRC Equity Research The huge landmark shopping malls Sun Plaza (Bukarest, Romania) with 71k sqm shoping area and Serdika Center (Sofia, Bulgaria) with 51k sqm shopping area started to run in 1Q 21 and will bring up 21 top-line by at least Euro 21m. From 211 on we expect > Euro 26m per year alone from the shopping space of Sun Plaza and Serdika. And there is still ~4k sqm office space available for more rental upside even if demand is weak at present. The occupancy rate of the total portfolio is almost unchanged at very comfortable 9% providing a stable rental income while the loan-to-value ratio of 57% (56% by end of 29) underlines a still solid financing structure. Two of the largest financial services firms in Austria/ CEE, Erste Bank and Vienna Insurance, are the largest shareholders accounting for 9% and 1% of the shares. Both shareholders have a positive effect on the business NAV per share slightly climbed again to 8.23 after 8.15 in 1Q. Cash and cash equivalents amount to Euro 143m covering almost 7% of total balance. Granulated tenant structure. The Top 25 tenants count only for 4% of yearly rental income. Furthermore the majority of rental contracts is long-term. Although s IMMO is present on the stock market since 1987 the awareness for the success story at the equity markets is still not too high in our view There are participation certificates in the financing structure with a hybrid character between equity and liability. This form of financing is unusual to many international investors. Thus we like the plan of s Immo to tender these papers into normal equity stock shares until year-end 211 in three steps. Unfortunately there was no 75% majority for this proposal on the AGM on 21 May s Immo will be able to show a steep rise in operating cash flows from approx. Euro 5m 29 to Euro 75m 85m in the current year 21 and even more than Euro 1m in the next year 211 as many developments are completed. With a look at fund investors they have all big pockets to invest in 21 and following years in stable cash-flow objects and have a special eye on mixed retail and office properties like s Immo offers In case of a sustained recession, vacancy rate could increase or rentals for coming tenants could be lower than before. Furthermore an economic downturn could have a negative impact on the valuation of the property portfolio leading to valuation losses burdening P&L (but there were hardly revaluation losses in the past 3 quarters and climate in many markets improved or is at least stable now). 2
s Immo Cockpit 3, 25, Quarterly rental income 21,18 21,675 21,88 21,794 22,26 22,421 21,937 2,935 21,88 26,347 Revaluation 112 6 1,161 4,9 763 1,73 15, 4, 29,639 1, 6, 5, 8, 1, 91,575 Quarterly EBIT Gross rental yield vs. Occupancy rate 4, 4, 6, 8, 1, 18,96 13,323 13,133 13,478 1,344 15,771 14,313 989 21,57 77,887 1.% 8.% 6.% 4.% 2.%.% 91% 91% 91% 91% 91% 91% 9% 9% 89% 9% 6.4% 6.3% 6.4% 6.7% 6.8% 6.7% 6.7% 6.7% 6.8% 6.8% Rental yield Occupancy 1, 1, 3, 4, 5, 6, 7, 8, Quarterly net income after minorities 6,211 2,821 2,621 5,84 482 2,734 5,982 233 6,99 74,785 Portfolio development sq m' 1,55 1,511 1,511 1,517 1,515 1,5 1,433 1,444 1,448 1,45 1,47 1,49 1,4 1,355 1,35 1,3 1,25 Lettable space Number of objects 27 265 26 255 25 245 24 SEE 24% Source: Company data (2Q 21) Value of portfolio by region Germany 3% CEE 21% Austria 25% 8% 6% 4% 2% % Portfolio value vs. LTV Euro m 2, 1,91 1,828 1,852 1,839 1,847 1,854 1,9 1,778 1,8 1,75 1,666 1,7 1,622 1,6 Portfolio value LTV 1,5 1,4 Source: Company data, SRC Research Countries of Private investors, 51% Shareholder structure Tri Star Capital Venture Ltd., 11% Institutional investors, 19% Source: Company data Vienna Insurance Group, 1% Erste Group, 9% * a subjective selection of SRC Research 7. 6. 5. 4. 3. 2. 6.94 PE ratio 15.83 6.5 6. 5.5 5. 4.5 Shareprice Development 7,. 6,. 5,. 4,. 3,. 2,. 1,. 1. 6.77 5.83 4... 1. 28 29 21e 211e 212e 4.51 Sparkassen Immobilienanlagen AG (WBAG:SPI) Volume Source: Company data, Capital IQ SRC Research 3 3 SRC Equity Research
P&L Account for 31/12 IFRS (Euro ') 28 29 21e 211e 212e CAGR '9 - '12e Revenues 125,682 153,555 182,962 214,149 23,912 14.6% thereof rental income 85,737 87,553 18,391 13,52 142,248 17.6% thereof revenues from service charges 23,474 29,15 34,722 41,86 45,568 thereof revenues from hotel operations 16,471 36,897 39,849 41,841 43,96 Other operating income 2,587 8,246 3,298 3,331 3,365-25.8% Expenses directly attributable to properties -45,27-61,192-55,279-65,251-72,546 Hotel operating expenses -12,575-29,71-28,293-32,636-33,615 Revenues less directly attributable expenses 7,487 7,98 12,688 119,593 128,115 Net Gains on property disposal 8,318 1,9 7, 6,58 8,7 66.1% Management expenses -19,594-19,533-19,142-19,334-19,527 EBITDA 59,211 53,275 9,546 16,839 117,288 3.1% EBITDA-margin 47.1% 34.7% 49.5% 49.9% 5.8% 13.5% Depreciation -4,737-9,113-8,233-9,637-1,391 Property Revaluation -3,682-97,238-3, 27, 3, Operating profit (EBIT) 23,792-53,76 79,313 124,23 136,897 EBIT-margin 18.9% -34.6% 43.3% 58.% 59.3% EBIT-profit without revaluation result 54,474 44,162 82,313 97,23 16,897 34.3% Net financial result -9,552-35,541-44,2-45,1-45,5 Participating certificates expenses (hybrid capital) -6,442 11,161-9,35-17,85-19,6 Earnings before tax (EBT) 7,798-77,456 25,763 61,253 71,797 Income tax expense -2,72-1,412-3,92-8,33-1,52 Tax rate 27% n.m. 12% 14% 14% Net profit 5,726-78,868 22,671 52,922 61,746 Minorities 87 39-3 -6-95 Net profit after minorities 5,813-78,559 22,371 52,322 6,796 Number of shares (in million) 68.1 68.1 68.1 68.1 68.1 Earnings per Share (EpS) in Euro.9-1.15.33.77.89 EPRA Net Asset Value per share (Euro) 9.38 8.13 8.7 9.1 9.5 Dividends per Share (DpS) in Euro....3.4 Book Value per Share (BVpS) in Euro 8.47 7.3 7.36 8.13 9.2 Total assets 2,144,545 2,235,193 2,25, 2,41, 2,45, 3.1% Shareholders' equity (without minorities) 576,998 479,3 51,374 553,676 614,444 8.7% Shareholders' equity incl. participating certificates 863,877 74,661 762,374 814,676 875,444 5.7% Equity ratio 4% 33% 34% 34% 36% Return on Equity (RoE) 1.% -14.9% 4.6% 9.9% 1.4% Key indicators Number of objects 263 256 262 275 285 Property portfolio market value (Euro million) 1,778 1,91 1,95 2,8 2,125 Total lettable space in square meters 1,511,4 1,355, 1,561, 1,635, 1,71, Gross rental yield in % 6.7% 6.7% 6.6% 6.4% 6.2% Occupancy rate in % 91% 9% 88% 88% 91% Loan to value ratio in % 47% 56% 56% 53% 51% 4 SRC Equity Research 4
SRC Research - The Specialist for Financial and Real Estate Stocks - SRC - Scharff Research und Consulting GmbH Klingerstrasse 23 D-6313 Frankfurt Germany Fon: +49 ()69 / 4 313-8 Mail: Scharff@src-research.de Internet: www.src-research.de Rating Chronicle Date Rating Former Price Former Target Sparkassen Immobilien 21 May 21 Buy 4.77 8. Sparkassen Immobilien 5 May 21 Buy 5.1 8. Sparkassen Immobilien 27 April 21 Buy 5.3 8. Sparkassen Immobilien 27 January 21 Buy 4.86 8. Please note: Sparkassen Immobilien share price mentioned in this report is the closing price of 2 September 21. Sparkassen Immobilien mandated SRC Research for mentoring the Sparkassen Immobilien share. Disclaimer 21: This equity research report is published by: SRC-Scharff Research und Consulting GmbH, Klingerstr. 23, D-6313 Frankfurt, Germany (short name: SRC Research). All rights reserved. Although we feel sure that all information in this SRC report stem from carefully selected sources with a high credibility, we cannot give any guarantee for accuracy, trueness and completeness. All opinions quoted in this report give the current judgement of the author that not necessarily is the same opinion as SRC-Scharff Research und Consulting GmbH or another staff member. All in this report made opinions and judgements might be changed without a pre-announcement. Within the scope of German regulative framework author and SRC- Scharff Research und Consulting GmbH do not assume any liability for using this document or its content. This report is just for information purposes and not a request or an invitation or a recommendation to buy or sell any stock that is mentioned here. Private clients should search for personal advice at their bank or investment house and should keep in mind that prices and dividends of equities might rise and fall and that nobody can give a guarantee of the future development of equities. The author of this report and the SRC-Scharff Research und Consulting GmbH commit themselfes on a unsolicited basis to have no long- or short-positions in equities or derivatives related to equities mentioned in this report. Reproduction, distribution and publishing of this report and its content as a whole or in parts is only allowed with an approval of SRC management board in written form. With acceptance of this document you agree with all regulations mentioned here and all general terms and conditions you will find at anytime at our website www.src-research.de. 5 5 SRC Equity Research