VGP CORRECTION NTA : Never Mind the Yield Gap, Focus on Cash Generation
VGP reported FY22 operating profit before unrealised gains of 177.5m. These include 87.2m of realised gains on asset disposals. The REBIT (incl. JV) amounts to 90.3m, which compares to our expectation of 83.5m on lower SG&A and higher solar income. The IFRS figures are impacted by 184m unrealised losses from its own portfolio and 210m from the JV. Despite the total impact of 394m (JV at 100%) due to yield expansion (7.3% on total FV). The CORRECTED NTA per share amounts to 84.4 vs. our expectation of 98.7. We underestimated the yield expansion effect. At the end of FY22, the share count increased by 25% The gearing is reported at 34.4%, up from 29.8% FY21, but still well below covenants at 65%. A FY22 dividend is declared of 2.75 per share, that is below our expectation of 3.00, but nevertheless a sign of confidence in its cash generating capacity. The development pipeline is slightly ahead of our expectation at 814k sqm vs. 750k sqm expected. Overall, we like the focus on cash generation in this report and look forward to get more clues on the JV talks and pipeline developments on the Analyst Call at 10h30 in Antwerp (Physical+Virtual). If they can reassure that demand remains structurally strong over the next couple of years, our estimates can increaseVGP 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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