Diös
Diös - ‘21e P/CE of ~9x lowest in ABGSC coverage (ABG Sundal Collier)
2020-07-03 16:26
Cash earnings yield of ~10% ~20-22e
Guides for same Q3 rent collection as last year
Share down -26% YTD vs. sector average at -20%
Q2 impacted by COVID-19 but recovery expected for ‘20eCOVID-19’s impact on Q2 earnings related to discounts of SEK 24m, and CEPS fell by 11% y-o-y in the quarter (vs. ABGSCe 3%). In comparison, Diös generated a CEPS CAGR of 9% from 2015-19. After the Q1 report, we cut our estimates by 5-7% on the back of an increased vacancy rate, discounts and the avg. interest rate (higher 3M Stibor). The Q2 numbers and management guidance in the conference call leave us confident in our estimate changes post-Q1, which is why we make only minor estimate revisions. Management guides for the same rent collection figures in Q3 as last year. Net letting in Q2 reached SEK -2m (7m) and 58m TTM (24), which indicates modest growth. In summary, we expect 2% CEPS growth in ‘20e and 10% in ’21e, corresponding to a CAGR of 6%.
Property value revisions of -2.1% ’20e cushioned by CE
In Q2, Diös reported EPRA NAV of SEK 73.8 (vs. ABGSCe 74.8), up 10% y-o-y adj. for DPS. Diös saw its property value fall by -0.7% in Q2. The value revisions are 97% driven by lower inflation assumptions. Due to the uncertainty surrounding retail values, we pencil in value revisions of -2.1% for ‘20e. We expect a CEPS contribution to EPRA NAV of ~10% annually, which takes EPRA NAVPS to SEK 75 and SEK 82 in ’20e and ’21e, respectively, representing a CAGR of ~6% (9% adj. for DPS). The strong cash earnings contribution to EPRA NAV allows values to decline by ~4.5% in N12m before ‘20e EPRA NAV (adj. for DPS) falls.
‘21e P/CE of ~9x implies lowest multiple in ABGSC coverage
Diös’ stock is down 26% YTD vs. the sector at 19%. The ’21e P/CE of ~9x implies a 47% discount to the sector average at ~16x. Moreover, the ’20e P/EPRA NAV of 85% is lower than the sector average at 95%. Historically, Diös has traded at a 40% discount to the sector on a 5y average P/CE of ~10x and P/EP
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