LHV Institutional Baltic Insight, February 19th, 2020
* As expected, EfTEN Real Estate Fund III (EFT1T ET, “Fundâ€) reported a strong set of results for Q4 2019. The Fund’s revenues for Q4 2019 totalled EUR 2.5m (+7.9% y-o-y), nearly in line with our EUR 2.4m forecast. The operating profit (EUR 3.1m) though was significantly stronger than our EUR 2.0m estimate, primarily due to the EUR 1.6m gains from the revaluation of investment properties. Mostly as a result of gains from the revaluation of investment properties, the Fund reported a net profit of EUR 2.6m (+35.6% y-o-y), leading to the full-year net profit of EUR 7.7m (+22.8% y-o-y).* Supported by the Fund’s cash balance of c.a. EUR 13.0m, the Fund stated that it could distribute EUR 3.5m (EUR 0.82 per share; implied dividend yield of 4.3%, based on the share price of EUR 19.20) as dividends, which is c.a. 35% more than determined by the dividend policy.
* The Fund will be proposing the approval of the merger with EfTEN Kinnisvarafond AS at the 2020 AGM. This merger is likely to be concluded in 2020 and will result in the Fund having a larger and more diversified property portfolio with a value of EUR 350m. While the majority of the deviation was a result of the gains on revaluation, we may consider reviewing our forecasts for the Fund as significant changes may happen in the portfolio and financial potential of the Fund following the merger mentioned above. Our current fair value range for EfTEN of EUR 17.90-18.80 (closing price as of 14 February 2020: EUR 19.20). Please also refer to the tables and chart in the attachment.
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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