Q3 net letting of SEK 11m is better than peers

CEPS growth of 5% and 13% in ‘20e and ‘21e

‘21e P/CE of 17x vs. sector average at 18x

New financial targets suggest continued strong growth
The COVID-19 impact on income is still minimal and NOI came in at SEK 330m (ABGSCe at SEK 331m) and grew by 8% y-o-y in Q3 (+14% in Q2 and 18% in Q3). The recurring PTP of SEK 240m came in -2% below ABGSCe at SEK 246m due to higher net financials. FastPartner reported a net lease of SEK 11m, which is better than peers. In Q3, FastPartner announced new financial and operational targets including increasing income from property management per common share by 10% p.a. and ROE of > 12% p.a. Fastpartner has for the last 5y and 10y achieved a CEPS CAGR of 11.5% and 11.7%, respectively. We argue that the company will reach its growth target over time and expect a CEPS CAGR of ~10% in ‘20e-22e.

Cash earnings yield of ~6% to support NAV growth
Fastpartner’s value revisions amounted to 0.5% of the portfolio value, in Q3 (ABGSCe at -0.25%). Reported EPRA NAVPS came in at SEK 84.2, but we adjust for D shares and preference shares (at quarterly end share prices). Adj. EPRA NAVPS amounts to SEK 76.7 (ABGSCe at 75.6). As a result, EPRA NAVPS rose by ~19% y-o-y (adj. for DPS). For ‘20e and ’21e, we forecast 5% and 14% EPRA NAVPS growth (adj. for DPS) from CEPS contributions of ~6% p.a. and value revisions of -0.1% in 2020e and 3.5% in 2021e, which takes EPRA NAVPS to SEK 76 and SEK 85 in ‘20e and ‘21e.

Trading at discount to sector despite strong growth outlook
The share is down ~15% YTD compared to the sector (Carnegie Real Estate Index) at ~8%. FastPartner has historically traded at multiples above the sector average. For example, the five-year average on P/EPRA NAVPS multiples stands at ~25% above the sector average. The share is trading at a ‘20e P/EPRA NAVPS (adj.) of 109%, which is above the sector average at par. The ’21e P/CE of 17x corresponds to a discount to the sector average at 18x.

research@abgsc.com (Introduce.se)

ABG Sundal Collier - Introduce.se