Original-Research: The Grounds Real Estate Development AG (von GBC AG)
Monday, 4 December 2017
Original-Research: The Grounds Real Estate Development AG - von GBC AG
Einstufung von GBC AG zu The Grounds Real Estate Development AG
Unternehmen: The Grounds Real Estate Development AG
Anlass der Studie: Research Report (Inital Coverage)
Kursziel: € 5.40
Analyst: Cosmin Filker, Marcel Goldmann
'An attractive real estate proprietor is being developed'
High return potentials and stable cash flows with real estate development
and inventory management; extensive project pipeline available; price
target well above the price of the current capital increase
Following the integration of its operating subsidiary The Grounds Real
Estate AG, The Grounds Group intends to cover the real estate value chain
as widely as possible. The Group is planning the development of residential
and commercial real estate within the context of project development. This
includes the purchase of undeveloped land and land with planning
permission, in addition to the acquisition of existing real estate with
subsequent renovation or conversion. The project development will be
operated primarily for the development of the company's own inventory.
However, properties that do not meet the long-term investment criteria of
the company may be sold at short notice.
With this integrated business model, The Grounds Group is in an outstanding
position within the German listed real estate companies. In our opinion,
the combination of earnings potential in the development segment with the
sustainability of the real estate portfolio is very attractive. In the
medium term, the Group plans to significantly expand its real estate
portfolio to a maximum of EUR500 million in order to gain a comprehensive
basis for stable income and will implement a continuous dividend strategy.
At the same time, the company is able to participate in the very attractive
market environment. Low interest rates, rising populations in the areas
addressed by the company and the favourable development of construction
costs for project developers are the main drivers behind the expected
growth in dynamic demand for residential real estate.
The Grounds Group currently has five contractually secured development
projects and a further eight projects that are currently in an advanced
phase of negotiation. The main focus of the regional projects is on the
fast-growing metropolitan regions of Frankfurt am Main and Berlin. With a
projected average equity ratio of 25% at the project company level, The
Grounds Group is able to handle large investment volumes. In addition to
typical bank loan financing, the groundwork for the real estate portfolio
also includes capital increases through contribution in kind, capital
increases through cash contributions and mezzanine financing.
During the course of the expected progressive realisation of the project
pipeline, we expect a significant increase in revenues in the coming
financial year, with a generally high level of profitability. Both the
increase in rental income anticipated by us and the realisable project
margins should, in combination, enable an EBIT margin of significantly
higher than 20.0%. For 2020, our last concrete year of estimation, we still
conservatively estimate an EBIT margin of 20.1% based on total output, with
total output amounting to EUR132.56 million. In the medium term even higher
profit margins are possible, which we have taken into account in our DCF
Within the scope of the DCF valuation model, we calculated a fair value
(post money) of EUR5.40 per share. This is well above the current placement
price of the current capital increase of EUR2.20 and we have therefore
awarded the rating BUY.
Die vollständige Analyse können Sie hier downloaden:
Kontakt für Rückfragen
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oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.
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