Benelux Company Note: VGP: One land in the bank is worth two on the street
Buy VGP. Based on our updated SOTP valuation, we argue that VGP’s latest share price is valuing the development potential embedded in the current land bank at only 25% of our FV estimate. Stated differently, this implies that the street expects VGP to develop less than 30% of its current land bank. This at recent developer margins which we take to decrease 5% pa in order to be conservative. We think this is exaggerated given the strong demand for logistics assets, the smooth cooperation with Allianz and mgt’s splendid track record. We upgrade our TP to € 128 (last published € 85) based on a SOTP & DCF valuation which does not take into account any future acquisitions of land apart from the 1.4m sqm currently under option. We rate the shares Buy.Navigator and its subsidiaries are engaged in the production and sale of cellulose pulp and related products, the purchase of wood and agricultural and forest production, the harvesting of forests and the transport of wood from the forests to the plants, and the production and sale of electricity and thermal energy. Co. is also involved in the production of paper and derivative paper products.
VGP NV is a Belgium-based real estate development company that constructs and develops industrial real estate and ancillary offices, which are rented out to clients on long term lease contracts. The Company operates in three business segments: the Development activities segment is focused on the identification and acquisition of the land and development of the infrastructure, the design of buildings, the coordination of architectural and engineering aspects, the administration to obtain the necessary permits, the tendering and coordination of the construction works, including site management, and the facility management of the real estate portfolio; the Property Management and Leasing services segment is responsible for managing the operation of the buildings, and the Facilities Management services segment is responsible for managing the operation of the buildings and performs all actions, such as maintenance services, waste management services and maintenance greenery, among others.
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