WOOD Flash - Dom Development: 3Q21 - another strong quarter, we see upside to our full-year figures

Dom Development has delivered another strong set of results in 3Q21. Both 3Q21 and 9M21 exceeded our estimates, and Dom seems to be heading for another record-breaking year. While we need to monitor the impact that the rate hikes have on the demand for apartments, the key bottleneck, currently, continues to be supply, as availability of new apartments remains limited and prices continue growing. Dom seems to be on-track to deliver around 3.4k apartments for the year, in line with our existing forecast. The continued strength in pricing and margins exceeds our expectations, however, and we see upside to our FY21E figures, and probably also to our FY22E estimates. While we do not see the current margin strength as sustainable, following the entry into Tri-City, Wroclaw and Krakow, we believe Dom should be able to increase its mid-cycle level of volumes substantially, compared to its former Warsaw-centric model. We maintain our positive view on the stock, as the key argument underlying our thesis of sustainably higher volumes in the medium- to long-term remains unchanged, even though we acknowledge that the rate cycle could weigh on the sentiment surrounding the sector.