WOOD Flash – Echo Investment: 2Q20 – upbeat message, but leverage remains high; focus on disposals
Echo reported a decent set of 2Q20 results today (23 September). Construction continued to progress on time, despite the pandemic, and management highlighted the significantly more favourable construction cost environment. The company’s key achievements were the two bond issuances, totalling PLN 250m, which have reduced the pressure related to the near-term bond maturities. We expect investors’ focus to remain on disposals. During the call, management highlighted that of the five office properties under sales negotiations currently, two are at a very advanced stage, with the LOIs signed. In our view, successful disposals should act as a catalyst for the stock, and should help to reduce the leverage, which is currently too high, in our view, at 40% net debt to assets.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.
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