Erste startet UBM (damit auch PIAG) mit hohen Kurszielen

"- We initiate coverage on UBM Development AG1 that will emerge from the merger of PIAG and current UBM expected for mid-February. Implementing a liquidity / size discount of 15%, which we would fully remove upon with the planned capital increase later this year, we arrive at a target price of EUR 35 and a clear BUY recommendation.

- UBM Development (UBM in the following) is a pure-play real estate developer with a clear strategic focus on selected markets (AT, GE, PL, CZ) and asset classes (Residential, Hotel, Office).

- The combination of “current UBM” and PIAG creates a property developer with a critical mass in a European comparison, which covers the whole development value chain from land selection to the final exit. In mid-February, PIAG will disappear and will be merged into UBM at an exchange ratio of 10:3.7 (10 PIAG for 3.7 UBM).

- In 2015-17, UBM Development plans to dispose of significant amounts of non-core real estate assets, which will lead to strong profitability contributions. From 2018 onwards, the profitability should begin to normalize at ROE levels of 8-9%, similar to what the “current UBM” has been able to achieve ahead of the merger.

- These assets sales will help reducing net debt. Together with a planned capital increase (EUR 50-100mn is guided; we included ca. EUR 100mn) the equity ratio shall improve from 22.8% (as of June 14) towards 40% in 2016e.

- PIAG shares offer to best way to benefit from UBM Development’s upside ahead of the merger. Our UBM Development target price translates into a target value of EUR 13.0 in PIAG terms."

PIAG Immobilien

Erste sieht FACC weiter als Buy

Our latest Company Update is now available for you. The main highlights are:

– Lower target price of EUR 10.5 (prev. EUR 11.0). The basic investment case has not changed, but we reduce our near-term estimates following the missed 3Q14/15 guidance.

– 3Q results: The company was unable to conclude negotiations for the sale of development services or compensation payments for higher costs following customer modifications and missed the goal to break even after nine months. Operationally, the increasing ramp-up of new projects helped to produce clear earnings improvement q/q, based on 24% higher product sales.

– Lower FY14/15 EBIT guidance: Management no longer expects to get all compensation payments for extra costs in FY15 (YE February 28) and now guides considerably lower EBIT y/y (about EUR 35mn) on sales of EUR 580mn.

– Market environment remains very positive: In 2014, Boeing/Airbus received net orders for 2,888 plane (deliveries: 1,352) and FACC keeps gaining market share. The strong USD should support results with a delay (hedging), especially as of FY17e.

– Estimate changes: We lower our FY15e and FY16e estimates, which are now some 5-6mn below company guidance/budget and somewhat below consensus. We built in some safety cushion after the disappointing results so far. The consensus for FY15e is still too high.

– Restoring confidence will be key: Investors fancy FACC as a pure play on a very interesting market, as well as its 95% exposure to the USD. However, delivering on promises will be the key issue to close the 11-26% discounts vs. peers on FY16e multiples.

FACC

Walter Stephan (Vorstandsvorsitzender, FACC) (Bild: Peter Hautzinger)
>> Bildauswahl durch die BSNgine, zum Originalzusammenhang

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