Graphisoft Park: still great value (stays BUY)
We reiterate our BUY rating on Graphisoft Park (GSPARK), increasing our 12M PT to EUR 13.0/share. Even with its low leverage (2Q24 net LTV of 32%), GSPARK generates 8-9% FFO ROE, one of the highest among the European landlords. Trading at a >30% discount to book, this translates into an FFO yield in the mid-teens, well ahead of its cost of equity, which we estimate at c.9-10%. GSPARK plans to build around 150 apartments in the Southern area of the Park. We expect to learn more details about the residential project in the next 6-12m. For now, we pencil in a c.20-30% gross profit margin (GPM), with selling prices at EUR 3.5k per sqm, boosting the CF and P&L in 2027E. The proceeds may be paid out as dividends (we estimate in 2028E). Over the next 5Y, GSPARK could pay out a cumulative c.EUR 50m in dividends, on our estimates. This is almost half of its current market cap. At present, it is only paying out around half of its FFO. The retained earnings could fund organic growth via developments, or a gradual debt amortisation. Decontamination of the Northern Development Area, and M&A, remain potential triggers.Graphisoft Park SE Ingatlanfejleszto Europai Rt is a Hungary-based company engaged in the real estate operations. The Company operates as a holding and provides management, financial and administrative services to its subsidiaries. As of December 31, 2011, the Company operated two subsidiaries, Grpahisoft Park Kft, engaged in the real estate development; and Graphisoft Park Services Kft, responsible for property operation tasks. The total area of the Company's properties was nearly 18 hectares. As of December 31, 2011, the Company's two subsidiaries, Graphisoft Park Universitas Kft and GP3 Kft merged into Graphisoft Park Kft. As of December 31, 2011, the Company's parent entity was Graphisoft SE.
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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