60313 Frankfurt, de
+49 (69) 400313-80
UBM with solid figures in the first half 2015
We adapt our too optimistic profit estimate for 2015 - TP reduced to €58.00 - Buy rating affirmed
Yesterday, on 27 August, UBM released its 1H 2015 report and hosted a conference call to give more insight into the numbers and its strategy. In the reported period, UMB reached a solid top line growth and an even stronger increase in operating performace. While the production output rose by 12% to Euro 206m, the revenues even surged by 26% to Euro 110m. The company benefitted from the merger with PIAG in February 2015 and generated through the capital increase gross proceeds of around Euro 59m, which will be used to invest in new development projects. In addition, the company was able to acquire some attractive new development projects and managed to secure attractive plots in the core markets Germany, Austria and Poland and has a well-filled pipeline of c. Euro 1.5bn. Furthermore, the property portfolio was further reduced. In this context, UBM signed in June 2015 the agreement of sale for the the andel's Hotel in Berlin and the Radisson Blu Hotel in Polish Wroclaw. As a result of the solid top line growth, operating profit (EBIT) jumped by more than 55% to almost Euro 23m and pre-tax profit even doubled from over Euro 8m to Euro 15m. The pre-tax margin improved from almost 10% to 14%. As a result of the high portion of property sales in Germany, tax ratio rocketed from 19% (1H 2014) to 45%, which resulted in a significantly lower net profit growth of only 17% to Euro 7.6m
The CEO Karl Bier stated in the conference call that a complete portfolio sale is also reasonable and he added, that at the moment two institutional investors are in the due diligence process of a big portfolio, which consists of about 18 buildings in four european markets.
The 1H 2015 report was the first consolidated statemant of the company after the merger. Due to the information of the report and additional explanations in the conference call, we adapted our too optimistic forecast for the 2015 net profit. As we are still convinced, that the company is able to sell the bulk of the portfolio until the end of 2016, we stick to our 2016ff estimate for the operating profit (EBIT).
Therefore, we reduced our 2015 EBIT forecast from Euro 81m to Euro 58m, which led to a target price reduction from Euro 63.00 to Euro 58.00. On the current level of the UBM share price we maintain our Buy recommendation. For any queries regarding this UBM research update please do not hesitate to contact us.
UBM Development will join our 2015 investor event Forum Financials & Real Estate on 10 September at the Frankfurt Hilton. You will find more information and the opportunity for a cost-free registration on www.src-research.de/forum
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