Texaf's land bank holds undiscovered value. Its business model is simple, offering unique exposure to high-end real estate in Kinshasa (DR of Congo) and a sandstone quarry supplying local infrastructure and concrete needs. We raise our TP from € 35 to € 42 and reiterate our Buy rating.
• Real Estate.We see Texaf accelerating its real estate investments, generating 9% annual rental income growth over FY15-17 on the back of a targeted 50/50 offices/residential portfolio mix. We expect larger office projects driven by enhanced know-how and international demand. Available land is scarce in Kinshasa, and the fact that a significant proportion of Texaf's land bank is indicated as the city's safe zone should enable value appreciation ahead.
• Quarry.Current economic weakness is hampering infrastructure works, but demographic growth should alter this situation. We therefore feel comfortable forecasting a gradual recovery in demand at stable selling prices of € 17.7 per tonne in FY15-17. We also bank on an improvement in operating margin (from 27% to 29%), based on last year's investments.
• Investment case.Texaf offers unique exposure to a high-quality real estate portfolio with strong growth and value appreciation potential ahead. In the mid-term, lucrative build and sell activities could be added. Revenue from the sandstone quarry is more cyclical, but demand for concrete and roads is expected to persist. Our valuation is based on a SOTP model pointing to a theoretical fair value to which we apply a 20% country-risk discount. We therefore up our TP from € 35 to € 42 and maintain our Buy rating.

Pour lire la suite de ce noodl, vous pouvez consulter la version originale ici.

distributed by