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AAREAL BANK AG
AAREAL BANK AG
Solid Q3 figures
10 Nov 16
Net profit attributable to shareholders decreased by 10% to €46m for Q3 16 compared to Q3 15. Net interest income was down by 18% to €175m for Q3 16 compared to Q3 15. Loan loss provisions decreased by 11% to €33m in Q3 16. Commission income rose by 10% to €44m in Q3 16. Administrative expenses declined by 14% to €127m in the same period. Pre-tax profit decreased by 10% to €74m for Q3 16 compared to Q3 15. The tax ratio declined slightly from 32% for Q3 15 to 31% for Q3 16. The RoE before tax was 10.3% for Q3 16 compared to 12.4 for Q3 15. The Basel 3 fully phased-in core Tier 1 ratio was 13.6% at end September 2016 versus 13.1% at year-end 2015. Aareal Bank raised its operating profit target of a range between €300m and €330m to €360m and €380m for FY2016 including an expected positive non-recurring pre-tax effect of €28m in Q4 which should be offset by a negative tax effect.
Good Q2 earnings overlapped by previous year's one-off gain
11 Aug 16
Net profit attributable to shares decreased by 63% to €73m for Q2 16 compared to Q2 15 which benefited from a profit for negative goodwill of €150m from the WestImmo acquisition. Net interest income was down by 7% to €177m for Q2 16 compared to Q2 15. Loan loss provisions decreased by 6% to €29m in Q2 16. Commission income rose by 12% to €47m in Q2 16. Administrative expenses rose by 6% to €144m in the same period. Pre-tax profit declined by 48% to €120m for Q2 16 compared to Q2 15. The tax ratio rose from 10% for Q2 15 due to the tax-free one-off gain to 32% for Q2 16. The Basel 3 fully phased-in core Tier 1 ratio was 13.2% at end June 2016 versus 13.1% at year-end 2015. Aareal Bank confirmed its operating profit target of €300m to €330m for FY2016.
Improved dividend policy: payout ratio up to 80%.
31 May 16
We have initiated coverage of the German Aareal Bank with a price target of €39 per share and an ADD recommendation. Aareal Bank is a mortgage bank with a business focus on commercial real estate and services to commercial real estate customers. Positive items are: The property market in Germany is booming. The vdp property price index in Germany has increased every year since 2010 for both residential properties and commercial properties. The index increased by 5.0% for FY2015. Aareal Bank seems to have no problems to fulfill future Basel 3 fully loaded CET1 targets. The opposite is the case. The bank therefore decided to enhance its dividend policy in February 2016. Aareal plans to continue to distribute an ordinary dividend of approximately 50% of the EPS for the financial years from 2016 onwards. For the financial years 2016 until 2018, it is planned to add a supplementary dividend, increasing from 10% (2016) to between 20% and 30% of EPS, respectively. The Consulting/Services segment is very special. This offers the housing and commercial property industries services and products for managing property portfolios and processing payment flows. It delivers over €8bn of highly-advantageous customer deposits from the housing industry which the real estate finance business can use. Additionally, the Consulting/Services segment is very valuable to Aareal Bank in terms of customer relationships and know-how regarding the financial situation of customers. The concerns are: The real estate finance business is cyclical. Aareal Bank was granted a silent participation of €525m and a guarantee facility of up to €4bn for unsecured issues from the German State in 2009 due to the uncertainties of the financial market turmoil. Aareal had paid back the silent participation to the German State by FY2014. Aareal Bank is targeting a pre-tax RoE of 11% for FY2016 and at least 12% over the long term (2020 plus). These are targets which universal banks promise after tax. But it is much better than what Deutsche Bank or Commerzbank delivered over the last few years. The higher RoE figures of Aareal Bank in 2014 and 2015 are based on one-off gains due to lucky buys.
Positive returns from all asset classes in Q316
28 Nov 16
Tetragon Financial Group (TFG) reported fair value earnings of US$49.7m for the third quarter of 2016, with positive contributions made by all asset classes. NAV total return was 1.3% for the quarter and 7.8% for the nine months to 30 September 2016. Having completed a US$100m tender offer in June 2016, TFG commenced a US$50m tender offer on 9 November 2016, which should be meaningfully accretive to NAV per share given the current wide share price discount to NAV. Consistent with previous years, the third interim dividend was held in line with the second interim, confirming TFG’s 5.9% yield.
N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.
Small Cap Breakfast
28 Nov 16
Warpaint London—Schedule one update. Raising £2.5m at 97p. Expected mkt cap £62.6m vs revenues of £22.3m Walls & Futures REIT — Has raised £1m at £1 to acquire, refurbish or develop residential properties in the UK . Due to arrive on ISDX on 29 November Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
17 Nov 16
Topic of the quarter: Following on from our last quarterly we have delved further into the potential and challenges that the Internet of Things present the sector. Having spoken to a wide variety of companies from the sector (large and small, UK and overseas) it is apparent that there is going to be a very significant increase in the amount of data either generated by or available to Support Service companies. The key to generating value from this change will be breaking down the silos in which data is currently held, attracting and investing in the right skills and talent, seeing beyond the short-term investment that is likely to be needed and engaging with clients on a higher, more strategic level. If the sector doesn’t react, then the door is wide open for the Technology sector.
25 Nov 16
Sound Energy (SOU): Completion of fundraise (BUY) Following yesterday’s announcement relating to the fundraise on the Primarybid platform the company has successfully completed the transaction. Analyst: Dougie Youngson Ithaca Energy (IAE): Inspection delay (BUY) During the final stages of commissioning faults were identified in some junction boxes. Consequently start up of production has been delayed until early January whilst the situation is remedied. Analyst: Dougie Youngson Zambeef* (ZAM): Good performance in a challenging year (CORP) Zambeef has reported FY2016 results which we feel are commendable given an extremely difficult twelve months which saw the collapse of the Kwacha, high local inflation, drought, power cuts and the requirement for a large-scale refinancing of the business. In this context double-digit underlying progress in revenue and gross profit is a significant achievement. FY2017 should be a far more 'normal' year and we are not materially changing our FY2017 forecasts or target price. Analyst: Raymond Greaves Gresham House Strategic* (GHS): Attractively priced (CORP) On a 26% discount to NAV of 1,025p yet targeting a 15% annualised return and having made a clear statement on dividend distribution (distributing 50% of net realised profit as a dividend, with 15p indicated from net realised profit YTD for a 2% yield), GHS shares present an attractive investment opportunity. The management objective remains the construction of a concentrated portfolio of mainly quoted smaller companies acquired on compelling multiples, with a three- to five-year holding period and significant engagement envisaged to maximise returns. Analyst: Duncan Hall