The fall in H1 16 results cast doubt on the dividend - HOLD vs BUY - TP 15€ (vs 17,2€)
Whilst the period’s operating trends are not bad the increase in almost all expense lines at a time when there is a drop in the top-line has produced a drop in ordinary income which is unparalleled in the sector. Although mention is made of the ambition to "maintain the distribution policy", the already strained balance sheet does not offer enough flexibility to make new investments (apart from already secured investments) and the discount to NAV prevents any calls upon the market for new capital without substantial dilution. An improvement at Banimmo as well as a reduction in the disproportionatly high cost structure must be achieved. We lower our recommendation to NEUTRAL vs BUY and our price target to €15 vs. €17.2.Affine is a property company specializing in commercial property. Co. is engaged in real estate activities and leasing activities. Co.'s activities are divided into four poles: a Parisian pole (offices), and 3 regional poles (offices, retail, warehouses & industrials). Office premises in French regions represent 43% of the portfolio and contain major assets such as the Lille Europe tower; Retail focuses on commercial properties, which consist chiefly of city-centre retail areas; and Warehouses and Industrials represents the logistics properties of the Affine group, including several types of platform, most of these being bi-modal (rail/road).
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