Nextensa Slightly Lowering Our TP To Reflect More Conservative Assumptions

While Nextensa is expected to report H1 FY23 results on 17th August 2023, we already made a full review of our investment case and while most of our assumptions are still holding up well, we made a few adjustments to the developmental pipeline of the company to reflect the slower realisation of projects and increased the cost of debt to 5.5% which is approximately the current rate at which similar companies could raise debt. We see Nextensa as a much safer play in the Benelux RE space because the company's revenues come from its developmental activities but also from its extensive RE portfolio from which the company earns a yield upwards of 5.0%. The periodicity and high predictability of these indexed rental incomes significantly reduces earnings volatility and makes it easier to maintain a healthy balance sheet especially during down markets. Added to this, Nextensa has, during FY22 and FY23, continued to shrewdly play the market and sell ‘non-core assets' while managing to pocket attractive capital gains. While our conviction on Nextensa's long-term story has not changed, due to difficulties witnessed across the broader market (Benelux RE), we incorporated a few more conservative assumptions in our model which brings down the implied intrinsic value to €60.0 per share. Thus, we reiterate our ACCUMULATE rating and lower our TP to €60.0.