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COLONIAL: FY2019 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results
Gross Rental Income: € 89.0 M (0.0% vs. -3.1% BS(e));
Recurrent EBITDA: € 75.0 M (-3.8% vs. -2.6% BS(e));
Recurrente Net Profit: € 35.0 M (+2.9% vs. +2.9% BS(e));
FY2019 vs. FY2018 Results
Gross Rental Income: € 352.0 M (+1.4% vs. +0.7% BS(e));
Recurrent EBITDA: € 283.0 M (+1.1% vs. +1.4% BS(e));
Recurrente Net Profit: € 139.0 M (+37.6% vs. +37.6% BS(e));

The FY2019 results were good, and in line with forecasts (and in line with the company’s own EPS guidance). In 2019 we saw strong growth in recurring EPS (+23%) and NAV per share (+16% including the dividend).
The numbers are affected by the divestments made in the past 12 months, partially offset with the incorporation of an additional month of Axiare into the cope of consolidation. Thus, rental income grew +1% and recurring EBITDA by +1%. Adjusted for the scope of consolidation, the results show LfL rental growth of +4% (in line with 9M’19), due mainly to increased prices.
The growth in LfL rents was +3% in Paris (+3% in 9M’19), +6% in Madrid (+5% in 9M’19) and +2% in Barcelona (+3% in 9M’19), and thus there were no big changes in 4Q’19. There were no big changes in renewals (release spreads) vs. 9M’19, either: Barcelona +31%, Madrid +9% and Paris +7%. Vacancy (EPRA) as of the end of Sep’19 stood at 2.7% (3.5% in 3Q’19).
Recurring Net Profit rose sharply (+23%) thanks to the growth in rents, the improved Financial result and the smaller cash outflows from minority shareholdings (after increasing the stake in SFL). EPS per share is € 0.27/sh. (in line with BS(e)).
NAV per share grew +14% in the past 12 months (+16% including the dividend) to € 11.50/sh. (vs. € 11.45/sh. BS(e)) with the asset portfolio growing +7% in value over the past 12 months (+9% LfL). According to the company, this value increase is equally distributed between yield compression, rental improvement (ERVs) and the higher value linked to the portfolio under development (on which the company has conveyed a positive message on the rental income levels that may be generated). As of the end of the year, assets totalled € 12.19 Bn. By cities, LfL GAV growth was +9% in Paris, +6% in Madrid and +16% in Barcelona.
There is no doubt this set of results is good, although in line with forecasts, both in rents and capital values. That said, we think the share price is already factoring in a positive enough scenario, as it is trading with a +3% premium to its NAV as of Dec’19, and after having risen +39% over the past 12 months, our recommendation remains SELL. T.P. € 12.35/sh. (upside +4.75%).