LHV Institutional Baltic Insight, May 19th, 2020
* Baltic Horizon Fund (hereinafter referred to as ‘BHF’ or the ‘Fund’) published a good set of Q1 2020 results on 15th May 2020. The total revenues of EUR 7.6m (+53.9% y-o-y) were within our forecast range. Similarly, the net profit of EUR 3.4m (+54.3% y-o-y) was a mere EUR 0.1m below the top end of our estimate. Please also refer to the tables in the attachment.* The Fund’s net rental income of EUR 5.8m for Q1 2020 increased significantly from the EUR 3.9m level achieved in Q1 2019. This was mostly attributable to the new acquisitions that were made over the past 12 months, including Galerija Centrs (Latvia) and North Star (Lithuania) office building. Both of these properties had a significant impact on the consolidated net rental income for the period. On an EPRA like-for-like basis, the Fund’s net rental income demonstrated an annual increase of 2.8%. This was mostly due to the improved performance in Estonia and Latvia, but the COVID-19 lockdown in the Baltics (especially in Lithuania) weakened the potential overall performance. However, the Fund stated that the Q1 2020 results were largely unaffected by the outbreak and it is likely to have a more dominant impact on the Q2 2020 result.
* While footfall traffic and tenant turnover are expected by BHF to improve in H2 2020, there is still uncertainty over the economic and labour market conditions and the impact of those on consumer confidence and spending. Our fair value range for the Fund is EUR 1.40-1.55 (closing price as of 15th May: EUR 1.036).
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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