FastPartner - In a club that has outperformed the sector (ABG Sundal Collier)

2019-12-04 06:32
One of the entrepreneur-led real estate success stories
~19% 2020e EPRA NAVPS growth, adj. for dividends
CEPS growth of 15% in ‘20e, sector at 6%
Above-sector average returns
Our analysis concludes that entrepreneur-led real estate companies have consistently outperformed the Carnegie Real Estate Index. In our view, Fastpartner and its CEO, Sven-Olof Johansson, belong in this group. What these entrepreneurial leaders have in common is that they have large share ownership in their companies, have capital allocation strategies that can be unconventional and are more focused on long-term value than short-term gain. In the past five years, Fastpartner has generated a return of ~190%, which is 20pp better than the Carnegie Real Estate Index ~170%) and 170pp better than the OMXS30 ~22%).

Average EPRA NAV growth of ~20% p.a. over ’19-’21e
We forecast CEPS growth of 17% in ’19e and 15% in ’20e (vs. sector growth of 10% and 6% based on ABGSC estimates). The main drivers are rental income growth from announced acquisitions and projects, plus a higher NOI margin. We forecast value uplifts of 7.6% in ’19e and 5.5% in ’20e, coupled with a CEPS contribution of ~6% p.a., which takes EPRA NAVPS to SEK 72 and SEK 84 in ’19e and ’20e. These estimates imply EPRA NAVPS growth (adjusted for dividends) of 23% and 19% in ’19e and ’20e, vs. sector growth of 15% and 12%.

Fair equity value range of SEK 67-134
On our ’20 estimates with the stock trading at the current P/EPRA NAV multiple of ~1.2x, we get an equity value of SEK 100. If the share were to trade at its historical low of a P/EPRA NAV of ~0.8x, we get an equity value of SEK 67, and at its historical high of ~1.6x, we get an equity value of SEK 134. This gives us a fair value range of SEK 67-134. Fastpartner’s current EPRA NAV premium of ~24% is in line with the sector premium. On P/CEPS TTM multiples, Fastpartner’s ~24x multiple is 20% higher than the sector’s ~20x. We note that both Fastpartner and the sector are trading at historica
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ABG Sundal Collier - Introduce.se

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