FOURLIS | On the “REIT” path – v2.0
In our new note on Fourlis we revisit our OpCo-PropCo framework first presented in March 2019, arguing that the upcoming REIC demerger will help the group unlock the value of its real estate through tax benefits and, particularly, re-rating of the rental income within the REIC. Switching our valuation to a SOTP (OpCo at 8.8% WACC, REIC at 10% discount to NAV), we lift our PT to €6.2 effectively valuing the group at a still undemanding 5% higher capacity) and EBITDAaL to remain c17% off its pre-COVID level. We anticipate full return to normalcy in 2022 (revenues +2% above 2019 levels), with EBITDAaL returning to the pre-COVID level (>€45m).In our report we also reiterate our view that IKEA’s strategy pivot towards small and medium-scale stores has added an extra avenue of growth for Fourlis, namely capacity expansion. Following the opening of the IKEA medium-sized store in Varna and the mini store in Piraeus in 2020, we expect 5 more openings in the next 2-3 years. These coalesce in capacity-led growth of c10% vs 2019 levels (by 2022), thereby leaving scope for positive earnings surprises in the coming years given our conservative top line assumption (sales densities remaining well below 2019 levels).
Co. is engaged in the manufacture, import and distribution of electrical household appliances and the manufacture of FOURLIS kitchen hoods. In addition, through a subsidiary, Co. is engaged in the operation of a retail chain.
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