Citycon (Hold, TP: EUR6.00) - More FX headwinds
The Q2 results missed our forecasts and Infront consensus, despite good occupancy rates and LFL NOI growth. Citycon repeated its 2023 guidance, but an added FX downside risk, which is our base case given current rates. The company also expects to complete its EUR500m disposal programme, with EUR380m more to go by end-Q4. However, we believe rising interest rates and weak property transaction markets will only make this possible at large discounts. We have cut our 2023–2025e EPS by 10–13% and our target price to EUR6 (6.7). We reiterate our HOLD, seeing a risk of an equity raise to improve LTV.Citycon is an active owner, operator and developer of shopping centers. Co. aims to increase its net yield from shopping centers over the long term through active retail property management and systematic redevelopment efforts. Co. is involved in the day-to-day operations of its shopping centers. As of Dec. 31, 2011, Co. owned a total of 36 shoppings centers: 23 in Finland, 9 in Sweden, 3 in Estonia, and one in Lithuania. Co. also owns 43 other retail properties: 36 in Finland and 7 in Sweden and one undeveloped lot in Finland. Co. manages two commercial shopping centers in Finland.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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