WOOD Flash – Globe Trade Centre: 2Q18 results - strong underlying performance, BUY reiterated
GTC posted solid 2Q18 results this morning, with c.EUR 14m of FFO I, exceeding our estimate of EUR 13m slightly. With EUR 29m of FFO I in 1H18, GTC has already achieved more than 50% of our full-year target. As such, we believe the company is well on track to reach, or even exceed, our EUR 56m FFO I estimate for 2018E. With EPRA NAV at EUR 1,120m (at a PLN/EUR of 4.25, this would translate to PLN 9.86/share), GTC trades at an 88% P/NAV, and a 5.9% FFO yield on our 2018E estimates.The external conditions remain favourable. Leasing demand is remarkably strong across the region and we see evidence of further yield tightening in a number of the markets in which GTC operates. We believe the key factor holding the share price back in recent months has been the perceived risk of technical pressure related to the anticipated exit of Lone Star. While a degree of uncertainty remains until a deal is announced, we believe the recent dip in the share price has created an excellent opportunity to buy into what remains one of the fastest-growing companies in the European listed real estate universe (we see GTC expanding its FFO by 15-20% annually over the next five years). We reiterate our BUY rating, while our 12M price target (PT) of PLN 11.7/share offers over 30% upside from current levels.
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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