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No significant suprises in the 9M 21 figures. We question here the opportunity of buying Deutsche Wohnen again. Play Vonovia’s next bid in 2022-24?
Companies: Deutsche Wohnen SE
NAV was flat overall sequentially, standing below Vonovia’s bidding price of €53 per share. DW posted low positive revaluations vs. its peers. Guidance was maintained of a roughly flat economic performance.
Deutsche Wohnen won’t show strong operational figures in FY 21 because it is managing external constraints first, in our view. Short-term issues remain (referendum, season 2) and the intra asset-class rotation continues in favour of riskier plays.
Despite a flattish FFO leaning on rents down 4% lfl, even if attributable to the rent freeze, the book value benefited from further significant yield compression in FY 20. Positive revaluation accounted for 7% lfl (€1.9bn). Valuers’ parameters (discount rate, capitalisation, vacancy) have been very favourable in FY 20.
Deutsche Wohnen showed a flat organic performance (rents, EBITDA, FFO), however it announced a 6% forward positive revaluation in FY 20, following the flat valuation in H1 20.
Positive revaluations were broadly anecdotal in H1 20. Some negative news (rents, low inflation) have been balanced by further yield compression (both lowering discount and capitalisation factors since December 2019). The risk reward becomes less attractive progressively.
Following our Idea Kicker on 11 May (”Time to question its status”), Deutsche Wohnen confirmed the low leverage of its slowing lfl growth in Q1 20. Despite the material cushion of high end-market values vs. low book values, Deutsche Wohnen should not experience a massive revaluation in H1 20. We confirm our Reduce stance.
Up to now, we had anticipated a cycle coming progressively to its end in 2022-23. Coronavirus is now revealed as a catalyst, provoking a crisis earlier than we expected previously. We now believe that NAV will progressively stabilise or decrease as from 2020. However, we hope that Deutsche Wohnen will stay the “relative” safe-haven it is vs. peers. The tragic consequences of growing unemployment in the future, coupled with a deflation, could weigh on Deutsche Wohnen’s topline.
The accrued impact of Berlin’s rent-freeze should be €330m between 2020 and 2025, of which €190m in unrealised revenue growth, vs. the current €15bn NAV. If this impact is provisional (five years only?), the dimension of this potential one-off now looks clearer. And… pretty limited.
The operational figures were robust with +13% in FFO in H1 19. However, the revaluation slowed in H1 19 from €678m in H1 18 to €450m in H1 19. The book value has adapted progressively to the rent-freeze.
Market rents and prices per sqm are still increasing in Berlin. Both support our positive stance. DW is progressively answering Berlin’s citizens request by softening the rate of rent increases according to the tenants’ income. The net rent-roll is, nevertheless, very positive (new rents vs. former ones) and will support further revaluations by the end of H1 19.
Another good year for the German residential market. After Covivio and Vonovia, Deutsche Wohnen confirmed the nice appreciation of Berlin housing prices with an est. +11% revaluation, accelerating in H2 vs. H1. DW is the most exposed to the Berlin market (80% of assets), the most liquid in Germany.
Deutsche Wohnen (DW), with GAV €16bn, is the second largest German residential operator, just behind Vonovia (GAV €27bn). The group’s portfolio covers 9,487m², or 45% of Vonovia’s 21,228 m² portfolio.
DW has an important exposure to the Berlin market, which represents 76% of its Residential segment, and accounts for roughly €15bn GAV. The group’s Residential segment offers comparatively smaller units relative to its peer Vonovia, but the better quality of assets allows for higher rent
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Companies: Emmerson Plc
Aviva’s Q1 22 trading update was slightly above our expectations although this remains very much tied to the top-line and profitability could be impacted as of H1. Do the operations really mean that much for the share price with high dividends as a back-up? The latter are expected to continue as the firm has stated that it will release capital above its 180% solvency ratio.
Companies: Aviva plc
Companies: Plus500 Ltd.
Duke has raised £20m in new equity capital, subject to shareholder approval, to fund their continued expansion. The new capital will also support the company's target of increasing their debt facility by a further £25m, and therefore providing a total of £45m of new capital to invest. The increasing scale and diversification of the portfolio is forecast to eventually increase free cash flow per share once full deployment has taken place and will allow Duke to seek a reduction in its debt facilit
Companies: Duke Royalty Limited
Weekly round-up of AIM-listed healthcare news.
Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics
Companies: ANIC RUA CREO GENI HEIQ IHC IXI IUG OPTI SBTX VAL VLG
MERC has announced a raise of £20m across its first Knowledge-Intensive and annual Enterprise Investment Scheme funds. The raise underpins our AuM growth expectations for the year and highlight future growth potential across both existing and new strategies within the fund management business. The significant valuation dislocation within the Group persists, with MERC’s current market cap of £143m (o/w ~36% cash) implying a significant discount to the balance sheet portfolio and ascribing no valu
Companies: Mercia Asset Management PLC
Dish of the day
No Joiners Today.
No leavers Today.
What’s cooking in the IPO kitchen?
EnSilica, intends to join AIM. EnSilica is a designer and supplier of mixed signal Application Specific Integrated Circuits (ASICs). ASICs are integrated circuits or semiconductor chips developed for a particular use or product rather than for general purpose usage. ASICs help differentiate products through optimised hardware thereby making products smaller, faster, lower power and more
Companies: XTR XLM VRS SUP ROCK SLE SEMP OHG HDD FIH
Dish of the day
No Joiners Today.
No Leavers Today.
What’s cooking in the IPO kitchen?
Lekoil, the oil and gas exploration and production Company with a focus on Nigeria and West Africa intends to join the AQSE Growth Market. The Company was previously listed on AIM (LEK.L), however, Ordinary Shares have been suspended from trading on AIM since October 2021. Due 18th May 2022.
EnSilica, intends to join AIM. EnSilica is a designer and supplier of mixed signal Application Specifi
Companies: EEE FARN FCAP HZM JLP NSCI SRE
Companies: CLS Holdings plc
Companies: Civitas Social Housing Plc
Companies: Downing Strategic Micro-Cap Investment Trust PLC GBP
ADX Energy (ADX AU)C; Target price of A$0.060 per share: Flow rate at the top end of expectations at important appraisal well - The Anshof-3 well flowed ~75 bbl/d of light oil (and no water) on test from the Eocene reservoir. This has positive implications for production, reserves and the upside case. The flow rate was at the upper end of expectations (40-80 bbl/d). The well has not been acidized yet which could boost production rate b
Companies: TAL SNM XOM XOM TTE SEPL SHEL REP REP PAT OMV OMV HUR FAR ENI ENI EME EDR DELT DEC CEG AKRBP AKERBP ADX CE1 PEN PEN TETY TETY EGY VLE
Feature article: Latest ONS survey: steady as she goes…and ignore retail investors at your peril
The ONS (Office for National Statistics) has been charting the beneficial ownership of UK-quoted companies periodically since the early 1960s. The latest paper was published in March 2022, and considers the data for December 2020.
At December 2020, “Rest of the World” investors owned 56.3% of the market, a further growth since the last survey, while UK institutions’ ownership edged up to 31.6%.
Companies: VTA TRX SCE STX AVO ARBB PANR RECI PCA OCI IBT ICGT FAS FCSS FEV FJV FSV DNL CLIG BBGI
HgCapital Trust’s (HGT’s) sector expertise has allowed it to consistently deliver strong performance, with a 10-year NAV total return (TR) at 17.6% per year (with 30.9% over the last 12 months), materially above the FTSE All-Share of 7.2% per year and LPX Europe NAV Index of 11.5% per year. Importantly, this has largely been driven by top-line and earnings growth (90% of returns on HGT’s software and services holdings exited in 2001–2022 ytd) rather than multiple expansion, with five-year EBITDA
Companies: HGCapital Trust PLC
Landsec intends to shift a third of its portfolio from low-yielding mature assets to profitable new developments. Now, all leans on being abe to execute disposals quickly.
Companies: Land Securities Group PLC