Duna House: loan ranger, with dividends to boot (BUY)
In this report, we update our forecasts for Duna House (DH), a financial intermediary, a real estate broker and a developer. We set our new price target (PT) at HUF 1,189/share, implying 35% upside, and our rating at BUY (vs. no rating or PT previously). DH works with a network of over 4k entrepreneurs in Italy, Poland, Hungary, Poland, and the Czech Republic, across a network of over 240, mostly franchise, offices. Following its 2022 entry into Italy, financial intermediation accounts for around 80-90% of DH’s earnings. Its recent results have been fuelled by the sales of apartments in a residential development in Budapest, which have allowed DH to pay out EUR 25m in dividends over the past 3Y, exceeding our estimate of EUR 22m, and front-loading the payments vs. our original forecast. To put this figure into context, when we initiated coverage of the stock in mid-2022, the shares were trading at a market cap of EUR 46m. We expect the sales of the remaining apartments, as well as a land plot and its HQ office, which it owns, in Budapest, to bring in around a EUR 15m net cash inflow in the next 18M. Additionally, we expect the rate easing ahead to be supportive of the volumes in its core brokerage business. Accordingly, despite the strong performance that the shares have staged since the IPO (a total return of over 300%, or c.20% if annualised, with dividends reinvested), we believe the stock could offer further upside from the current levels.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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