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Mercialys closed its FY 22 with an affordable LTV ratio of 35%. This should support dividend payments in 2023-24 i.e. a 19% cash back.
Companies: Mercialys (MERY:EPA)Mercialys SA (MERY:PAR)
In Q3 22, the top-line was almost flat ex-indexation. Guidance was confirmed. Betting on a cash dividend in 2023.
Mercialys’ local footprint again worked well in H1 22. As far as the operational performance alone is concerned, Mercialys performed better than Klépierre, questioning the significant difference in terms of discount vs. NAV.
Companies: Mercialys SA (MERY:PAR)Mercialys SA (0IQU:LON)
Business looks to be stabilising with the bulk of the operational recovery how behind us. Prepare to play dividend yields rather than capital gains.
Mercialys’ guidance of a 2% rise in FFO in FY 22 reflects the landing performance of spared local assets. The 21% return expected in 2022-23 (dividend only) looks sufficient to support our Buy recommendation. Risk-reward looks favourable.
Both vacancy and collection rates improved in Q3 21. Due to the favourable base effect in Q4 21, wait for a good year-end for 2021. Guidance maintained.
Mercialys issued a new FY 21 guidance of FFO above FY 20’s low €95m. Both the low LTV ratio and nice local exposure make it a good candidate for a resilient share price despite lowering underlying rents in such a special period.
Q1 21 performance was the first “almost clean one” as one-off impacts resulting from 2020 dissipate progressively. With Mercialys being the first shopping malls’ landlord to release Q1 results, it allows a sector read-across before the full Q1 21 earnings season.
Support for tenants and non-recurring provisions for doubtful receivables weighed €30m, i.e. 16% of FY 19 revenue. H1 21 will show other charges probably but the latter should diminish progressively.
Companies: Mercialys SA
The Q3 20 performance was much better than in Q2 20, the latter having been twice better than peers, retrospectively. Both footfall and retailers’ sales are back to normative levels, as far as Mercialys is concerned. We admit that the crisis is far from ending. However, we believe that the risk reward is improving progressively.
H1 20 was safe with a stable FFO. However, H2 20 will be much harder with a 10-15% decline in FY 20 FFO (guidance) or a 20-30% decline in H2 20 alone. It reflects the lag effect of some rent cancellations, granted in Q2 20, but not in fact the negative contribution of increasing bankruptcies. Values were pretty resilient in H1 20, much as for the full Property companies up to now.
The good Q1 20 revenue did not reflect the current macro issues. Mercialys was unable to provide us with a guidance. The exit door could close in the coming months. Try to exit in favour of a bear market rally.
At constant perimeter, asset values declined by 0.7% in H2 19 and 1.4% in FY 19, i.e. at a stable pace, sequentially. NAV was safe in FY 19.
The still robust indexation, well above global inflation, brought half of the organic growth in Q3 19, as it did in H1 19. In Q4 19 and Q1 20, Mercialys and other similar companies will benefit from the positive basis effect of the impact from the French Yellow Vests protests (Q4 18 and Q1 19). Reassuring figures are therefore due in the next two quarters, or a positive optical illusion vs. the long-term transformation issues in the shopping mall industry.
Mercialys’ H1 19 indicators were c. in line with 2018’s (growth, LTV…). Much as Klepierre released today, and probably almost all other Shopping Malls landlords will do, it experienced a decrease in its GAV of 0.5% lfl since December 2018.
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Status of this Note and Disclaimer
This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objective
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Status of this Note and Disclaimer
This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv
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