Citycon (Hold, TP: EUR6.70) - Dividend cuts likely
We have cut our revenue and EPS forecasts, reflecting the Q3 miss, updated macro forecasts (higher CPI and interest rates) and announced asset sales. While the company is looking to divest EUR500m in assets over the next two years, we are concerned achieved prices could be lower than book value at end-Q3, as we expect yields to increase. The latter will also put pressure on LTVs. In our view, the company may have to reduce its dividends, and we have cut our DPS forecasts. We reiterate our HOLD as we have cut our target price to EUR6.7 (7.7) on our lowered EPS and NAV forecasts.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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