GTC: It’s a bargain (stays BUY)
GTC is a bargain, in our view. The stock trades currently at 6.4% and 8.6% FFO yields on our 2018E and 2019E forecasts, well above its average 5.2% 1Y FWD FFO yield of the past three years. With its large development pipeline, GTC screens as the fastest-growing European real estate name, on the Bloomberg consensus. On its current share price, it also ranks among the cheapest. We forecast a 15% FFO CAGR between 2017-22E, despite integrating a recession into our forecasts. Turning conservative, we factor into our model that the rents will decline by 10% on average, across GTC’s portfolio, in real terms, over 2020-22E. We also expect the yields to expand by 50bps across the portfolio. Even under these conservative assumptions, GTC still stands out as one of the best combinations of value and growth in the entire European RE universe, in our view. We reiterate our BUY, and set our new price target (PT) at PLN 10.4/share, from PLN 11.7/share.Globe Trade Centre is the parent company of the capital group, Globe Trade Centre (the Group). The Group is engaged in the development and rental of office and retail space and the development and sale of residential units. The Group is a real estate company in Central and Eastern Europe and South-eastern Europe, operating in Poland, Romania, Hungary, Croatia, Serbia, Bulgaria, and Slovakia. Additionally, it co-owns land in Ukraine and Russia and operates in the Czech Republic. The Group's portfolio comprises: completed office buildings and office parks as well as retail and entertainment centres; residential projects; and undeveloped plots of land and suspended projects.
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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