DEFAMA DEUTSCHE FACHMARKT AG DEFAMA Deutsche Fachmarkt AG
A good start into FY 22e
We keep our Buy rating with an unchanged PT of EUR 31.50 after DEFAMA reported sound Q1 sales and FFO figures. Q1 sales were up by 14.3% yoy to EUR EUR 4.6m (M´e: EUR 4.4m) and the FFO in creased by 15.4% yoy to EUR 1.95m (M´e: EUR 1.90m). The FFOPS amounted to EUR 0.44 in Q1 22 (Q1 21: EUR 0.38). The company reaffirmed the FY 22e guidance (FFO of EUR 8.5m/net income of EUR 3.5m), which is our in view a confident sign in light of the recent disappointing newsflow at numerous German real estate peers. Fur ther rental income growth can be expected in the coming months as three recently acquired properties (Bergkamen, Nordsteimke and Rondorf) will start to contribute to DEFAMA´s sales beginning with
Q2 and 89% of the company's rental income is CPI-linked. Thus, the company is well positioned in the short term to make progress on its growth path in the near future. As DEFAMA also maintained its target to achieve an annualized FFO of EUR 10m until the end of FY 22e (currently: EUR 9.1m), we see a high likelihood that the company will announce further property acquisitions throughout the remaining fis cal year. In summary, we deem the Q1 results should confirm that DEFAMA remains on track to achieve its FY 22e targets, supporting our positive stance on the investment case. The shares are currently trading at an estimated FFO yield 23e of 8.3%, which we think looks attractive against the background of promising mid-term portfolio growth targets and a high share of inflation hedged rent contracts in the defensive property portfolio.
(DEF GY) | Real Estate | May 27, 2022 |
Buy | unchanged | |
Price* | EUR 25.20 | |
Price target | EUR 31.50 | (unchanged) |
- XETRA trading price at the close of the previous day unless stated otherwise in the Disclosures
Market Cap (EUR m)1 | 121 |
Enterprise Value (EUR m)1 | 255 |
Free Float (%)1 | 72.0 |
Price (in EUR)1
- Valuation: Our estimates and thus PT remain unchanged.
Fundamentals (in EUR m)1 | 2019 | 2020 | 2021 | 2022e | 2023e | 2024e | Performance (in %)1 | 1m | 3m | 12m |
Sales | 11 | 15 | 17 | 20 | 23 | 26 | Share | -8.7 | -10.0 | 20.0 |
EBITDA | 7 | 9 | 13 | 13 | 15 | 17 | Rel. to Prime All Share | -10.9 | -7.3 | 30.2 |
EPS adj. (EUR) | 0.51 | 0.57 | 1.14 | 0.78 | 0.90 | 1.02 | ||||
FFO | 4.6 | 5.9 | 7.1 | 8.6 | 10.0 | 11.0 | Changes in estimates (in %)1 | 2022e | 2023e | 2024e |
DPS (EUR) | 0.45 | 0.48 | 0.51 | 0.54 | 0.58 | 0.61 | Sales | 0.0 | 0.0 | n.a. |
Operating Cash Flow (EUR) | 4 | 5 | 7 | 8 | 10 | 11 | EBIT | 0.0 | 0.0 | n.a. |
Dividend paid (EUR) | 2 | 2 | 2 | 2 | 2 | 3 | EPS | 0.0 | 0.0 | n.a. |
Capital expenditures (EUR) | 16 | 38 | 28 | 27 | 22 | 20 | Sponsored Research | |||
Ratios1 | 2019 | 2020 | 2021 | 2022e | 2023e | 2024e | ||||
EV/EBITDA | 19.4 | 21.5 | 18.4 | 20.2 | 18.4 | 16.8 | Author: Stephan Bonhage | |||
PCFR | 10.5 | 10.9 | 10.3 | 10.6 | 9.1 | 8.0 | ||||
P/E adj. | 32.5 | 34.8 | 24.4 | 32.5 | 28.1 | 24.7 | Financial Analyst Equities | |||
Dividend yield (%) | 2.7 | 2.4 | 1.8 | 2.1 | 2.3 | 2.4 | ||||
EBIT margin (%) | 40.1 | 38.6 | 53.2 | 40.2 | 40.0 | 40.3 | ||||
Gearing (%) | 281.7 | 420.5 | 437.7 | 346.9 | 336.8 | 313.3 | ||||
PBV | 2.8 | 3.5 | 4.4 | 3.2 | 2.8 | 2.4 | stephan.bonhage@metzler.com |
1Sources: Bloomberg, Metzler Research
Information for professional clients and eligible counterparties - not to be passed on to private clients | 1 |
Our investment case in a nutshell
- Focus on a retail property market niche: DEFAMA has become what we would call a relevant player in a niche of the German retail property market. Its prop erty portfolio consists of mainly retail parks, usually located in small and medi um-sizedcities of Northern and Eastern Germany. New acquisition objects within this fragmented market niche (purchase price per property usually be tween EUR 1m to EUR 5m) are too large for private buyers, but at the same time, too small for institutional investors. This allows DEFAMA to purchase at low market prices (~9x annual rental income in the past) and thus achieve double-digitrental yields.
- Growth momentum is driven by property acquisitions: The company has the long-termtarget to become one of the largest owners of retail parks in Ger many and pursues a "Buy and Hold" approach for its property portfolio. We believe retail park acquisitions should mainly drive sales and FFO growth in the coming years as DEFAMA intends to purchase new properties for EUR 15m to EUR 20m each year.
-
Anchor tenants with non-cyclical business models: Anchor tenants of DEFAMA´s retail parks are leading German food retailers, which account for approx. 40% of the rental income. Their non-cyclicalbusiness models should lower the risk of tenant losses and secure stable income generation for
DEFAMA, in our opinion. Moreover, food retailers profit from a low online pen etration in their sector.
Information for professional clients and eligible counterparties - not to be passed on to private clients | 2 |
Key Data
Company profile | ||
CEO: Matthias Schrade | CFO: - | Berlin, Germany |
DEFAMA, headquartered in Berlin, is a large German real estate company that specializes in the acquisition and management of retail parks. Acquisition targets are retail parks in small and medium-sized German cities, preferably in Northern and Eastern Germany. As of the 31.03.2022, DEFAMA´s property portfolio com prised 51 properties.
Major shareholders
Matthias Schrade (26%), Supervisory board (2%)
Key figures | ||||||||||||
P&L (in EUR m) | 2019 | % | 2020 | % | 2021 | % | 2022e | % | 2023e | % | 2024e | % |
Sales | 11 | 23.3 | 15 | 30.1 | 17 | 17.5 | 20 | 16.7 | 23 | 16.0 | 26 | 13.4 |
Gross profit on sales | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Gross margin (%) | 100.0 | 0.0 | 100.0 | 0.0 | 100.0 | 0.0 | 100.0 | 0.0 | 100.0 | 0.0 | 100.0 | 0.0 |
EBITDA | 7 | 27.3 | 9 | 27.6 | 13 | 48.5 | 13 | -5.5 | 15 | 16.2 | 17 | 13.9 |
EBITDA margin (%) | 62.9 | 3.2 | 61.7 | -1.9 | 77.9 | 26.4 | 63.1 | -19.0 | 63.2 | 0.2 | 63.5 | 0.5 |
EBIT | 4 | 25.3 | 6 | 25.1 | 9 | 61.9 | 8 | -11.7 | 9 | 15.4 | 11 | 14.2 |
EBIT margin (%) | 40.1 | 1.6 | 38.6 | -3.8 | 53.2 | 37.8 | 40.2 | -24.4 | 40.0 | -0.5 | 40.3 | 0.7 |
Financial result | -2 | -28.7 | -2 | -23.9 | -3 | -22.0 | -3 | -17.8 | -4 | -15.2 | -4 | -14.9 |
EBT | 3 | 23.3 | 3 | 25.8 | 7 | 86.3 | 5 | -23.5 | 6 | 15.5 | 7 | 13.8 |
Taxes | -1 | -28.7 | -1 | -38.7 | -1 | -49.4 | -1 | 15.4 | -1 | -15.5 | -2 | -13.8 |
Tax rate (%) | -25.6 | n.a. | -28.2 | n.a. | -22.6 | n.a. | -25.0 | n.a. | -25.0 | n.a. | -25.0 | n.a. |
Net income | 2 | 21.5 | 3 | 21.4 | 5 | 100.8 | 4 | -25.9 | 4 | 15.5 | 5 | 13.8 |
Minority interests | 0 | -48.8 | 0 | -62.9 | 0 | -85.8 | 0 | n.m. | 0 | 0.0 | 0 | 0.0 |
Net Income after minorities | 2 | 22.5 | 3 | 21.9 | 5 | 101.1 | 4 | -26.1 | 4 | 15.6 | 5 | 13.9 |
Number of shares outstanding (m) | 4 | 11.9 | 4 | 9.1 | 4 | 0.0 | 5 | 8.6 | 5 | 0.0 | 5 | 0.0 |
EPS adj. (EUR) | 0.51 | 9.5 | 0.57 | 11.7 | 1.14 | 101.1 | 0.78 | -31.9 | 0.90 | 15.6 | 1.02 | 13.9 |
DPS (EUR) | 0.45 | 12.5 | 0.48 | 6.7 | 0.51 | 6.3 | 0.54 | 5.9 | 0.58 | 7.4 | 0.61 | 5.2 |
Dividend yield (%) | 2.7 | n.a. | 2.4 | n.a. | 1.8 | n.a. | 2.1 | n.a. | 2.3 | n.a. | 2.4 | n.a. |
Cash Flow (in EUR m) | 2019 | % | 2020 | % | 2021 | % | 2022e | % | 2023e | % | 2024e | % |
Operating Cash Flow | 4 | 11.1 | 5 | 30.6 | 7 | 49.3 | 8 | 14.8 | 10 | 15.3 | 11 | 12.2 |
Increase in working capital | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. |
Capital expenditures | 16 | -48.4 | 38 | 135.7 | 28 | -27.4 | 27 | -2.0 | 22 | -18.5 | 20 | -9.1 |
Dividend paid | 2 | 29.4 | 2 | 27.5 | 2 | 6.7 | 2 | 6.3 | 2 | 5.9 | 3 | 7.4 |
Free cash flow (post dividend) | -14 | 52.2 | -35 | -152.3 | -22 | 36.3 | -21 | 6.8 | -15 | 29.7 | -12 | 20.7 |
Balance sheet (in EUR m) | 2019 | % | 2020 | % | 2021 | % | 2022e | % | 2023e | % | 2024e | % |
Assets | 104 | 21.6 | 137 | 31.1 | 156 | 14.3 | 188 | 20.4 | 208 | 10.8 | 230 | 10.5 |
Goodwill | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. |
Shareholders' equity | 25 | 50.7 | 25 | 2.1 | 28 | 11.6 | 39 | 37.6 | 44 | 14.2 | 51 | 15.8 |
Net Debt incl. Provisions | 70 | 7.0 | 106 | 52.4 | 123 | 16.1 | 134 | 9.1 | 149 | 10.9 | 160 | 7.8 |
Gearing (%) | 281.7 | n.a. | 420.5 | n.a. | 437.7 | n.a. | 346.9 | n.a. | 336.8 | n.a. | 313.3 | n.a. |
Net debt/EBITDA | 9.9 | n.a. | 11.8 | n.a. | 9.2 | n.a. | 10.6 | n.a. | 10.1 | n.a. | 9.6 | n.a. |
Structure
Tenant strucutre 2021
Sources: Bloomberg, Metzler Research
Information for professional clients and eligible counterparties - not to be passed on to private clients | 3 |
Disclosures
Recommendation history | Recommendations for each financial instrument or issuer - mentioned in this docu | ||||
ment - published by Metzler in the past twelve months | |||||
Date of dissemi | Metzler recommendation * | Current price ** | Price target * | Author *** | |
nation | Previous | Current | |||
Issuer/Financial Instrument (ISIN): DEFAMA Deutsche Fachmarkt AG (DE000A13SUL5) | |||||
25.04.2022 | Buy | Buy | 27.80 EUR | 31.50 EUR | Bonhage, Stephan |
01.03.2022 | Buy | Buy | 28.00 EUR | 32.50 EUR | Bonhage, Stephan |
21.02.2022 | Buy | Buy | 27.80 EUR | 32.50 EUR | Bonhage, Stephan |
03.11.2021 | Buy | Buy | 25.00 EUR | 27.20 EUR | Bonhage, Stephan |
11.10.2021 | Buy | Buy | 24.60 EUR | 27.20 EUR | Bonhage, Stephan |
29.07.2021 | Buy | Buy | 22.40 EUR | 25.50 EUR | Bonhage, Stephan |
- Effective until the price target and/or investment recommendation is updated (FI/FX recommendations are valid solely at the time of publication)
- XETRA trading price at the close of the previous day unless stated otherwise herein
- All authors are financial analysts
DEFAMA Deutsche Fachmarkt AG
13 . Metzler, a company affiliated with Metzler and/or a person that has worked on compiling this report has reached an agreement with the is suer relating to the production of investment recommendations.
Compiled: May 27, 2022 07:57 AM CEST
Initial release: May 27, 2022 07:57 AM CEST
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Defama Deutsche Fachmarkt AG published this content on 27 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 May 2022 07:36:58 UTC.
