Warehouses De Pauw FY22 Results, Switch on the Energy Pipeline

After the FY22 results, we update our model for the lower Capex (-50%) outlook and the increase in Energy investments over the next 3 years. In this note we add a Solar power segment to our financial estimates as this activity will become more significant to the quarterly estimates. We believe that in the summer, the solar gross income can amount to 16% of property revenue by FY25. The Energy division will increase its capacity from 113 MWp to 250 MWp by FY25. That is a quarter of a nuclear reactor capacity on a sunny day. With energy prices more volatile, a microgrid strategy makes a lot of sense. The 4Q22 Portfolio FV adjustment of -408m came as a shock as if the valuation experts (NL) suddenly woke up to the new reality, while in the meantime, most inflation indicators had already turned a corner. We expected 50bps of yld expansion over 1H23. As 4Q22 alone suffered 50bps, we now expect only another 25bps over 1H23. WDP chooses to run the company with a lower debt ratio and shift its investment strategy to renewables. We believe that in case of a prolonged downturn, WDP is in pole position to pick up interesting assets as it has the headroom on the balance sheet. However, as the merits of the renewable strategy add a degree of uncertainty, we prefer to lower our target price to 34, 64% premium to latest NTA (after capital increase).