Citycon (Hold, TP: EUR7.10) - NAV discount set to remain
Reported Q4 EBIT missed our forecast by 23%; however, excluding EUR12.7m indirect other operating expenses, adj. EBIT was 8% above. It wrote down asset values by 1.9% QOQ on a higher yield valuation, a trend we are concerned could continue in 2023. The 2023 EBIT and FFO guidance was broadly in line with our forecasts, and we have made only minor estimate changes. Citycon is trading in line with its historical 1–3 year forward P/FFO of c12x, and despite trading at a discount to our NAV, we find the stock fairly valued. We reiterate our HOLD, but have raised our target price to EUR7.1 (6.7).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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