Murapol Group: running to stand still (HOLD – initiation of coverage)
We initiate coverage of Murapol Group with a HOLD rating and price target (PT) of PLN 44.0. Murapol is a Polish housing developer focused on affordable, mass-market apartments, with a presence in both large and small cities. Its high gross profit margin, industry-leading ROE (>40%) and high dividend yield (12.6%) look appealing, and justify a high premium to book value, in our view. That said, high interest rates and the end of the mortgage subsidy programme have hit demand for smaller apartments hard. Recently, the company has completed more apartments than it has sold, leading to a build-up of unsold inventory. As a result, cash flow has not supported the generous dividend payments in 2022-24, which have been funded through debt (ND/equity doubled to 0.6x in 2024). The latest bond issue, priced at a 400bp premium over WIBOR, may underscore credit investors’ concerns about sustainability of such a model. Should Ghelamco’s financial difficulties worsen the cost and affordability of real estate debt, Murapol may be forced to review its payout policy, and align its distributions with cash flows, instead. This could be a material negative surprise. The upside risk would be a turnaround in demand, with Murapol able to sell the bulk of its inventory, while falling interest rates would solidify housing developers’ profits and support dividend plays.
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.
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