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Catena
Catena - Well positioned for e-commerce (ABG Sundal Collier)
2019-10-09 20:52
~14% CEPS growth ’19e vs. sector of 10%
~19% EPRA NAVPS growth, adj. for dividends
P/CEPS TTM of 19.5x vs. sector of 20.2x
Positioned for retailers’ transformation to e-ecommerceThe Swedish e-commerce industry is expected to grow by 14% in 2019, which we believe will increase demand for associated logistics. Food is one of the fastest growing (CAGR 34%) and least penetrated (2%) retail segments within e-commerce. As the largest logistics property company in Sweden, Catena has the competence, customer relations, and size to meet tenant demand. The company holds a land bank of 2.8m square metres, and is thus well positioned to benefit from current e-commerce trends. Catena counts DHL, ICA Fastigheter, Boozt and Apotea among its top-ten customers.
’18-’21e CEPS CAGR of 10% outpaces sector
We forecast CEPS to grow by 14% in ’19e and 8% in ’20e (vs. sector growth of 10% and 6%). The main drivers are rental income growth from announced acquisitions and projects, a higher NOI margin from completed project developments, higher occupancy rates, and energy efficiency enhancements. We forecast value uplifts of ~4.1% in ’19e and 3.5% in ’20e, coupled with a CEPS contribution of ~10% p.a., which takes EPRA NAVPS to SEK 197 and SEK 224 in ’19e and ’20e. These estimates imply EPRA NAVPS growth (adjusted for dividends) of 19% and 17% in ’19e and ’20e, vs. sector growth of 15% and 12%.
Catena trades at a 3% sector discount on P/CEPS TTM
Catena valuation multiples have expanded in line with the sector, and touched all-time highs in early September in terms of P/CE TTM and P/EPRA NAV. The company is currently trading at a 75% premium to last reported EPRA NAV, while the five-year P/EPRA NAV average is at a 12% premium. For comparison, the sector is trading at a 22% premium on EPRA NAV. Meanwhile, the current P/CE TTM is 19.5x vs. Catena’s five-year average of ~14x. However, the 19.5x multiple corresponds to a 3% discount to the sector average of ~20x. Catena reports its Q3 results on 2
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