Target price reduced to 18.55/share. Buy recommendation unchanged
We reduce our net profit estimates by more than 50% for 2018e and 2019e. The larger deliveries expected from 2020e should be offset by a lower EBITDA margin, resulting in an almost unchanged net profit for 2020e and 2021e. Going forward, we maintain the 16% EBITDA margin.
The positive cash flow generation would be postponed until 2020 (from 2019). In addition, Neinor could slow down its land acquisitions.
Our DCF valuation results in an equity value of €1,473.8Mn (€18.55/share). This figure is 13% lower than our previous target price (€21.32/share). Our main hypothesis are: 1) 4,000 deliveries run-rate, 2) +1.9% CAGR HPA (Housing Price Appreciation); 3) EBITDA margin of c.16%.
Neinor Homes’ GAV should reach €2,065.5Mn in December 2018e, resulting in a NNAV of €1,401Mn (€17.7/share). This amount is 11% higher than the last reported NNAV (€15.9/share).
Neinor Homes SA, formerly Neinor Homes SLU, is a Spain-based company engaged in the real estate sector. The Company focuses on the design, construction and promotion of residential properties. It develops housing projects in various Spanish cities, such as Malaga, Madrid, Barcelona, Cordoba, Vizcaya, Alicante, Almeria and Gerona.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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