Citycon (Hold, TP: EUR8.00) - Long-term appeal, fair valuation
Citycon’s Q1 results were broadly in line with our estimates and Infront consensus, but on the sale of three shopping centres, we have lowered our 2021e EPS from the high end to mid-range of the unchanged guidance. The valuation still has appeal on reported NAV, but we note that direct market transactions are taking place above the yields reflected in the latter. However, in our view, Citycon’s occupancy cost ratio (OCR) of only 9% suggests a lower market rent risk in its assets. We reiterate our HOLD, and have cut our target price to EUR8 (8.5) on updated 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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