Grivalia: Steady returns, upside optionality (stays HOLD)
Grivalia’s low leverage offers substantial room for debt-financed expansion. Progress on the acquisition front would not only drive top-line growth, but should also improve its ROE, thanks to a more efficient capital structure, in our view. The ongoing expansion of the hospitality business may also generate additional returns. However, we believe that it would be premature to include any upside from these factors in our forecasts. As such, we see Grivalia as fairly valued at the current levels. On our 2018-19E FFO, Grivalia trades at around a 5% FFO yield, in line with its 3Y average, but at a premium to most of its European RE peers, trading at around 5-8% 2018E FFO yields. Having made only cosmetic changes to our forecasts, we set our 12M price target (PT) at EUR 10.0/share (from EUR 9.11/share previously). With the increase being mostly a factor of the lower RFR (4% vs. 5% previously; Greek 10Y bond yield at 3.7% currently), we maintain our HOLD rating on the stock.Grivalia Properties Real Estate Investment is an investment property group with a major portfolio in Greece and an expanding portfolio in Southeastern Europe. Co.'s business is leasing out investment property under operating leases and is classified as a real estate investment vehicle under Greek Law 2778/1999. Co.'s investment strategy, aims at increasing its revenues and returns and towards creating added value for its shareholders. Co. is seeking to achieve this goal through: analytical follow up and monitoring of the macro-economic indicators; active management of its portfolio of assets; continuous monitoring of the portfolio's risk and the efficient management.
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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