LHV Institutional 'Hepsor Initiation of Coverage, December 3rd, 2021'
* Hepsor AS (HPR1T ET) is a fast-growing real estate developer currently focusing on development projects in Tallinn and Riga, the capital cities of Estonia and Latvia, respectively. Hepsor is developing both residential and commercial real estate. Within ten years of operations, Hepsor has completed 41 projects with a total sellable area of 93,000 sqm, including both residential and commercial properties. The current project pipeline comprises a total sellable area of about 140,000 sqm, including c.a. 91,000 sqm of residential and 49,000 sqm of commercial spaces.* We have approached the valuation of Hepsor using a combination of the income and market approaches. For the income approach, we used the Discounted Cash Flow model. For the market approach, we used a peer group valuation, which considers a few trading multiples for 2021-2023E and applies the peer group median multiples to the respective financials for the Group. Our valuation for Hepsor is calculated on a post-money basis as at the end of 2021, given the successful completion of the IPO and including the indicated net proceeds in the financial projections. We see the income approach as more suited for the valuation of Hepsor and assigned a 70% weight to DCF-based income approach valuation in the total value, leaving the peer valuation weight at 30%. Overall, we initiate the coverage on Hepsor, setting our fair value range (FVR) for the stock at EUR 14.00-15.20.
* This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts 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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