An impressive 54 bps of yield compression for H2 2015 - HOLD - TP 108€ (vs 103,5€)

The FY 2015 results publication is excellent and well above expectations. Growth in ordinary income is up by 8.6% to €5.61/share, the dividend is up 7.5% at €5/share, and H2 16 NNNAV +19.7% at €122.7/share. Ordinary income guidance for 2016, adjusted for the sale of healthcare is up 5% and anticipates a slight absolute decrease in the unadjusted result following disposals. Gecina now has substantial room for manoeuvre, given the low level of debt on their balance sheet which enhances the chances of replacing lost rents with opportunistic investments. We are raising our target of €103.5 to €108 at the end of 2016, but maintain our HOLD recommendation. It is still difficult to justify a multiple for Gecina that is greater than Unibail (or a price of more than €106). The attraction of AngloSaxon investors to NAV growth is probably enough to assure that the stock outperforms such considerations. At current prices, the discount to NAV is 10.4%, the 2016 earnings multiple is 19.8x and the 2016 dividend yield is 4.5%.