Appeninn - According To The Plan, So Far!

Appeninn – Instant Earnings Comment

Recommendation:  Accumulate

Target price (12M): HUF 743

According to the plan, so far!

 

• Appeninn published it FX report yesterday post market.. In short, Appeninn reached its guided figures for rental income, NAV, NAVPS, GAV for 2018, except for EBITDA guidance which was exceeded by 26%. The most relevant part is the EBITDA line in our view. We note in our cov. research that large part of the EBITDA in 2018 will come from revaluation gain, which notion was confirmed by the FY report. Out of EUR 19 million EUR 16 million came from revaluation gain (please find the gains for certain asset below), EUR 0.5 million from gain on sale and the remaining EUR 2.5 million arrived from the underlying business (implying 36% EBITDA margin), which is lower compared to our forecasted EUR 4 million for clean EBITDA. The difference stems from higher administrative and employee cost compared to our base case. 

 

• Administrative cost and personel cost jumped by a total of EUR 1.4 million in a year, this should not increase significantly, from now on.

 

• Debt level increased by EUR 17 million (+40% y-o-y) proportionally less than Gross Asset Value grow (+82% y-o-y) resulting a shrink in LTV ratio from 64% in 2017 to 50%, in line with the guided range of LT V (50-60%).

 

• Management indicated that there is no plan to distribute any profit from 2018 results, which was in line with our view, as the company is 100% at a growth mode.

 

• This year is going to be a gamechanger for Appeninn according to their business plan as growth should accelerate on the back of capital incrase. Gross Asset Value is expected to double in 2019, from EUR 117 million to EUR 264 million. Also, EBITDA is guided to increase to EUR 13 million from current EUR 2.5 million.

 

• As mentioned in our research, our target price depends on the share price Appeninn will be able to issue shares (we calculated with HUF 600 per share, 25% less than indicated in Appeninn’s business plan). As a sensitivity, assuming that Appeninn issues shares at current price (ie. HUF 500 per share) our target price would come lower by ca. HUF 50 per share due to dilution effect.
• Nevertheless, we believe one of the main question is whether Appeninn will be able to meet its guidance, because the most difficult part of the business plan(capital increase) is approaching, but so far so good!

 

Revaluation gains of the portfolio

Source: Appeninn FY report

 

Simplified P&L

Source: Appeninn FY report, Concorde

 

 

 

 

 

 

 

Gellert Gaál
analyst

CONCORDE SECURITIES LTD.

Alkotás Point
50 Alkotás street, H-1123 Budapest.
Phone:
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MEMBER OF THE CONCORDE GROUP

 

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