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When looking at the Q3 22 figures alone, we don’t share Icade’s kind of optimism. H1 23 should show some fragilities in the French residential development business, in our view.
Companies: Icade (ICAD:EPA)Icade SA (ICAD:PAR)
Icade experienced rising further vacancy in Offices sequentially. In residential development, the cancellation rate accelerated in Q2 22 alone. Guidance was confirmed, nevertheless.
Companies: Icade SA (0K4O:LON)Icade SA (ICAD:PAR)
In Offices, the pressure was concrete with a negative performance lfl. Rising construction costs in Icade’s development business will question French residential units’ affordability in 2023.
Yield compression in Healthcare has offset the impact of rising vacancy in Offices. The recovery recorded in Residential Development is about to stabilise in FY 22. The company’s guidance of +4% in FFO in FY 22 (before accounting for another tranche of disposals) doesn’t push to strong optimism.
Following stabilisation in Q2 21, vacancy was up 130bps sequentially in French Offices. Guidance unchanged. Nothing more about the Icade Santé IPO.
No major surprise in Q2 21 in the Property business: vacancy stands at a high level but was roughly flat sequentially. Reservations in the Residential Development business were flat sequentially too: strong lfl growth in H1 21 can therefore not be extrapolated to H2 21-2022. A negative base effect could occur in H1 22, in our view.
Q1 21 revenue was up 43% lfl with a negative contribution from the Property segment. Residential development was up 128% (lfl, IFRS) pushed by apartments delivered to the French Government arm (CDCH).
Much as Covivio and Gecina did earlier, Icade released a reassuring picture at pixel time (December 2020) as far as offices were concerned. It experienced some little negative revaluations too, but the balance sheet stays under control. It will pay a stable cash dividend of €4.01 per share.
As per Gecina, Icade’s vacancy was more or less stable on a sequential basis in Q3 20. The most interesting figure was the decreasing number of residential reservations in Q3 20, ahead of the contribution from the CDCH (French government). This reflects lower confidence from both individual investors and first-time individual buyers.
Companies: Icade SA
NNNAV was stable in H1 20 as valuers consider that the crisis doesn’t impact offices until now. It’s a fact that due to this specific business’s inertia, both vacancy and pressure on rents will not increase before H1 21, in our view.
We believe in a strong adjustment in Office values in FY 20-22. It could end in putting the balance sheet at risk. Having been negative during the last rush phase upto February 2020, we are now back to a negative stance after the share’s recent bounce. Just remember that 2009-10 resulted in a c. 25% adjustment in Icade’s GAV (Offices, lfl). Why should it be only 5-10% this time?
Following Covivio, Gecina, SFL… Icade reported a nice set of FY 19 figures. Positive revaluations slowed in the City of Paris in H2 19 (1.3% vs. 3.1% in H1 19) despite the acceleration in the heart of the City in H2 19. The surprise came from assets outside the Paris Region, showing a 19% lfl increase in H2 19 vs. 1% in H1 19. Following the share price’s rally, we stick to our negative stance.
Icade qualified its leasing activity as “resilient” in 9M 19 vs. “solid” in H1 19, or a change in its wording in our view. In fact, we observed a lfl decrease in rents in Q3 19. This leads us to become more cautious, aside our questions concerning the French Offices end-market around the City of Paris for some months.
There were some positive revaluations in H1 19 and rents increased slightly at constant perimeter. Both were slightly above the rents indexation, suggesting a very limited yield compression in H1 19, or some negative ones in some asset pockets. We continue to point out the weaker end-market around Paris (excluding the City of Paris) where Icade’s buildings are mainly located.
Icade’s rental business performed well in Q1 19 thanks a nice 2% inflation (indexation). However, the Residential and Office backlogs were down by respectively 8% and 47% yoy, or +5% and -5% vs. 31 December.
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While the management reiterated its full-year guidance, the third quarter results confirmed that interest rate increases also have a negative side in the form of negative equity adjustments and a looming asset quality deterioration.
Companies: Lloyds Banking Group plc
The FDA has announced it has completed the first pre-market consultation for a food product made from cultured animal cells. The submission, made by Upside Foods, and FDA response means that the agency accepts Upside's data package and conclusion that its cultivated chicken product is safe to eat. This clearly represents a significant achievement for Upside Foods and a major milestone for the cultivated meat sector in general, marking the first significant regulatory milestone in a major jurisdi
Companies: Agronomics Limited
Marlowe has released a robust set of H1/23E results, with strong organic growth (+8% YoY), improved Adj EBITDA margins (+100bps YoY to 18.8%), and confirmation that it is trading “slightly ahead” of expectations for full year Adj EBITDA. We nudge up our FY23E Adj EBITDA by £1m to £82m, leave FY24E Adj EBITDA unchanged (at £93m), but lower Adj Diluted EPS in both years (by 9% and 11% respectively), primarily to account for higher interest rates on increased borrowings (used to fund recent M&A). D
Companies: Marlowe Plc
Companies: H&T Group plc
A solid H1 performance is evident with revenue and earnings growth. The dividend has been maintained underpinned by £100m+ net cash. Whilst H1 earnings performance comfortably covered ~55% of our prior earnings estimates, we are encouraged to note that AuM has grown by 7% to £33.5bn in the last month, benefiting from positive market performance. Flows have remained neutral. We do not assume that strong growth returns, retaining cautious assumptions, but given current AuM is already ahead of our
Companies: Liontrust Asset Management PLC
Singer Capital Markets
Dish of the day
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What’s cooking in the IPO kitchen?**
Kistos Holdings plc, intends to join AIM. The Company was incorporated to act as a new holding company for the group companies 0f Kistos plc (KIST), a holding company with the objective of creating value for its investors through the acquisition and management of companies or businesses in the energy sector. Anticipated Market Cap £327m. Expected 22 Dec 2022.
AT85 Global Mid-Market Infrastr
Companies: SEE JSE MKA EAH ABDP MRL TENG KIBO
Alkemy’s 100%-owned subsidiary Tees Valley Lithium (TVL) has received full planning permission to build its planned world-class, low carbon, lithium hydroxide refining facility at the Wilton International Chemical Park in the Teesside Freeport, UK. Our indicative valuation increases to 1228p/sh (£12.28/sh) from 614p/sh previously. Details in the note...
Companies: Alkemy Capital Investments Plc
Palace Capital has released interim results to the end of September reporting adjusted profit before tax of £3.5m (1HFY22 £4.0m) and adjusted EPS of 7.9p (1HFY22 8.7p), mainly reflecting rising financing costs. The dividend was maintained at the current quarterly run rate of 3.75p and net debt was held broadly flat. EPRA NTA per share fell 8.7% to 356p. The sale of the industrial portfolio remains paused but smaller commercial sales continue together with the sale of apartments at Hudson Quarter
Companies: Palace Capital plc
Augmentum Fintech has reported stable NAV per share at 155.0p during 1H23 (flat HoH, +5% YoY). The 19.3% IRR since IPO is marginally below the Group’s 20% Internal Target Return, unsurprising given a challenging market environment. Broadly stable portfolio valuations come as particularly encouraging with underlying investee performances (100% avg. revenue growth for Top 10 assets) largely offsetting multiple compression (EV/NTM Sales from 5.7x to 4.2x). Following the realisation of AUGM’s invest
Companies: Augmentum Fintech PLC
Dish of the day
Looking Glass Labs (NFTX) joins the Access Segment of the AQSE Growth Market. The company is engaged in digital agency specialising in immersive XR metaverse design, non fungible token architecture and virtual asset royalty streams. Looking Glass Labs is currently listed on the NEO Exchange (Canada). Market Cap £18.8m.
EDX Medical Group joins the Access Segment of AQSE Growth Market. (Formerly TECC Capital plc) EDX operates a molecular biology and diagnostics laboratory
Companies: RUA WYN MOS VAST AEO MTPH TEK TLY ARK
Tatton is delivering strong organic growth, despite bear market conditions. In the 6 months to 30 September 2022 TAM attracted £907m of net inflows, and grew group revenue 15.1%, EPS by 12.9% and DPS by 12.5%.
Companies: Tatton Asset Management Plc
Companies: CLS Holdings plc
Feature article: A different kind of beat: Boyzone, 1996
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This month's feature article has been written in collaboration with The Quoted Companies Alliance.
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Hardman & Co
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Companies: LMP SGRO WHR ASLI EBOX BBOX SHED MLI