Trianon: Lower NOI but profitability remains high - ABG
This is a third party research report and does not necessarily reflect our views or values
Recurring PTP per share improved to SEK 7.11 (6.88)
Rental income rose 14% and NOI reached SEK 101m (92m), -10% vs. ABGSCe and -8% vs. cons. The effect from COVID-19 remains at ~SEK 2m per quarter, mainly due to reduced turnover-based rental income. A colder winter explains the slightly lower NOI margin compared to a year ago, and possibly the NOI miss vs. cons (-8%). Recurring pre-tax profit (PTP) grew by 17% y-o-y, to SEK 66m, in Q2. Recurring PTP per share, according to Trianon’s earnings capacity, has improved to SEK 7.11 (6.88) thanks to letting, lower interest costs and reduced shares in minorities. Net leasing fell to SEK 1.8m (SEK 2.4m in Q2’20).
SEK 492m of divestments strengthens acquisitions outlook
Property value uplifts were 2.1% (ABGSCe 1.0%) and long-term NAVPS grew by 34% y-o-y and 5.4% q-o-q, to SEK 115 (adj. for the hybrid). We have adjusted the net debt for hybrids in current and comparable periods, explaining the neg. deviation in the EPRA NAV and net LTV. Yields on residentials (69% of property value) came down 10bp q-o-q in Q2 to 4.1%. Net LTV (incl. 50% of the hybrid) has fallen 240bp in one year and 80bp q-o-q (following the divestments at Limhamn & Rosengård) to now stand at 56.7%. Net LTV excl. hybrids (the company’s definition) is 54.1%, ~600bp from its target of 60%. Management also indicates that its balance sheet will likely be used for transactions this autumn.
’22e P/CE of 27.0x – 19% above the sector
After a share price hovering at around SEK 135 from August 2020 to the beginning of April, the share is up by ~50%. ’22e P/CE of 27x is 19% above the sector average and the last reported P/EPRA NAV of 1.78x is 44% above the sector. The low operational risk assets of residential and community service properties are 75% of the total, and the growth of recurring PTP has consistently been above 25% (only exception of 10% in ’18).
Rental income rose 14% and NOI reached SEK 101m (92m), -10% vs. ABGSCe and -8% vs. cons. The effect from COVID-19 remains at ~SEK 2m per quarter, mainly due to reduced turnover-based rental income. A colder winter explains the slightly lower NOI margin compared to a year ago, and possibly the NOI miss vs. cons (-8%). Recurring pre-tax profit (PTP) grew by 17% y-o-y, to SEK 66m, in Q2. Recurring PTP per share, according to Trianon’s earnings capacity, has improved to SEK 7.11 (6.88) thanks to letting, lower interest costs and reduced shares in minorities. Net leasing fell to SEK 1.8m (SEK 2.4m in Q2’20).
SEK 492m of divestments strengthens acquisitions outlook
Property value uplifts were 2.1% (ABGSCe 1.0%) and long-term NAVPS grew by 34% y-o-y and 5.4% q-o-q, to SEK 115 (adj. for the hybrid). We have adjusted the net debt for hybrids in current and comparable periods, explaining the neg. deviation in the EPRA NAV and net LTV. Yields on residentials (69% of property value) came down 10bp q-o-q in Q2 to 4.1%. Net LTV (incl. 50% of the hybrid) has fallen 240bp in one year and 80bp q-o-q (following the divestments at Limhamn & Rosengård) to now stand at 56.7%. Net LTV excl. hybrids (the company’s definition) is 54.1%, ~600bp from its target of 60%. Management also indicates that its balance sheet will likely be used for transactions this autumn.
’22e P/CE of 27.0x – 19% above the sector
After a share price hovering at around SEK 135 from August 2020 to the beginning of April, the share is up by ~50%. ’22e P/CE of 27x is 19% above the sector average and the last reported P/EPRA NAV of 1.78x is 44% above the sector. The low operational risk assets of residential and community service properties are 75% of the total, and the growth of recurring PTP has consistently been above 25% (only exception of 10% in ’18).