Appeninn - New Strategy, New Hope?
Appeninn – Instant Earnings Comment
Recommendation: Under revision (prev: Accumulate)
Target price (12M): Under revision (prev: HUF 743)
New Strategy, new hope?
Appeninn released its new strategic presentation as there hass been a reshuffle in both amongst shareholders and the management. The real estate holding continues to operate office and retail assets across the country and aims to rotate its RE portfolio into premium assets, with two new items on its agenda - 1), aim to increase shareholder value 2), enter into the touristic market by developing hotels.
We will dig in the details of the strategy and will update our model and target price with the new assumtptions soon.
Prologue
In the first strategic presentation published in May 2018, the company laid out an ambitious growth plan. According to their guidance GLA (Gross Leasable Area) will more than quadruple by 2022, EBITDA will skyrocket from EUR 4.4 million (2017) to EUR 68 million (by 2022) on the back of large expected revaluation gains, development profits and potential disposals). This strategy relied on two pillars: developing ca. 95,000 sqm (mainly retail units and offices); and purchasing office buildings (69,000 sqm). As for the financing side, Appeninn planned to finance the great expnasion by the combination of capital increase and internal CF.
Appenin Vagyonkezelo Holding Nyrt (Appeninn Property Management Holding Plc) is a Hungary-based company active in the real estate sector. The Company operates in three segments: renting offices complexes and storages; real estate management; and industrial machinery leasing. The first segment includes seven office complexes and storages in Budapest. The second segment includes technical facility management (overall technical operation, operation and maintenance of building engineering an electricity, planned preventive maintenance and conservation, building surveillance, troubleshooting and renovations, among others) as well as infrastructural facility management (sanitary service and cleaning, reception services, security guarding, gardening, waste treatment and document destruction, among others). The third segment includes mobile telescoping cranes leasing. As of December 31, 2011, the Company operated 13 subsidiaries.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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