Echo Investment: Hold for the yield, hope for a bid (downgraded to HOLD)
Up by 25% since we upgraded the stock to a BUY in June, Echo has reached our former price target (PT) of PLN 4.9/share. The external conditions – strong leasing take-up for office space, and ample demand on the investment market, pushing yields lower – remain ideal for a build-to-sell developer. The expectations related to the payment of another early dividend (confirmed by the company this week) have been an additional factor supporting the share price throughout the summer, in our view. Last but not least, since Lisala announced that it was launching a review of strategic options earlier this year, we believe that Echo is being seen increasingly as a prospective takeover target. With its internal development team, high quality projects, excellent profitability and generous dividends, we believe Echo remains an attractive long-term story. That said, following the rally, further upside could be limited in the very near term, in our view. With only cosmetic changes in our forecasts, we adjust our 12M PT from PLN 4.9 to PLN 5.0/share, and recommend to HOLD the shares.Echo Investment is a real estate investment and development company based in Poland. Co.'s is engaged in operations in the real estate market, the design, construction and development of shopping and entertainment centers, hotels, office buildings, houses, blocks of flats and apartments. Co.'s operations are organized along three operating segments: Shopping and Entertaining Centers, Offices and Hotels and Residential. Co. also offers general contracting services for third party investors. Co. owns properties throughout Poland, including Szczecin, Poznan, Warsaw, Krakow and Kielce, among others, and abroad, including Ukraine, Romania and Hungary.
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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