Nice cash-back in 2023-24

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.

Appraisers favour stable values in September 2022

In Q3 22, the top-line was almost flat ex-indexation. Guidance was confirmed. Betting on a cash dividend in 2023.

Further slight improvement in Q2 22

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.

Play Mercialys' local footprint

Business looks to be stabilising with the bulk of the operational recovery how behind us. Prepare to play dividend yields rather than capital gains.

Slight FFO increase awaited in FY 22; play the dividend

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.

Still far from 2019 but an improvement in Q3 21

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.

Some clear but limited sacrifices on the rents side

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 under the sign of last French lockdown

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.

Another transitional year in 2021

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.

The contrarian's corner: buy it

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.

The shock in H1 20; the trend as from H2 20?

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.

Waiting for the first guidance

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.

Values slighty declined in France in H2 19

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.

Not that bad indeed !

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.

Almost the same H1 19 operational figures as Klepierre

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.

Uncertain outlook comes as no surprise

We take a positive view of Legal & General’s FY 22 results. Despite the tough environment, the Group managed to outperform expectations – something which was hardly a given for such a large asset manager. With L&G being widely exposed to the UK economy, it might be a call one does not want to make but the firm’s business remains one of spreads – as long as a default does not occur. We remain positive but concede that L&G embeds more risk than we had assumed.

Very strong CY22 - CY23 upgraded 10%

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Hybridan Small Cap Feast - 06 Mar 23

6 March 2023 @HybridanLLP 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

Equals Group (EQLS LN) - Platform for growth

Revenue rose 59% to £69.7m (consensus: £66.2m; Zeus forecast £65.0m); revenue per day rose 60% to £279k Equals Group’s 2022 results and 1Q trading update reaffirm our view on Equals’ valuation. It has made two bolt-on acquisitions, subject to regulatory approval, which add clear value. Organic growth remains strong: “revenues per working day so far in 2023 were £342k” up 52% yoy and up 13% on 4Q 2022.

LIBERUM: Real Estate Investors* - Profitable sales drive valuation increase and NTA outperformance

Belvoir Group - Debt free, entrepreneurial and diverse

2022 followed on from the strongest year for property in recent history, but Belvoir has, nevertheless, reported a robust set of full-year results further evidencing the power of its franchised model and strategy. FY 2022 revenue was up +14% (+2% like-for-like), gross profit up +6% and adj. PBT down -1% as the resilient Lettings income and expanding Financial Services business continued to grow (both +4% LFL), while housing Sales fell (-15% LFL) as market conditions weakened and administrative c

Morning Note – 27 March 2023

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Encouraging CY22 result

Hybridan Small Cap Feast - 14 Mar 23

14 March 2023 @HybridanLLP 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

LIBERUM: Pollen Street * - Clear fundraising momentum

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NAHL Group - Finals

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