WCM's last year's acquisitions materialize in a steep hike in 1Q performance (Buy and 3.25 Euros affirmed)(PresseBox) (Frankfurt, )
Quite recently on 19 May 2016, SCR Research published an opening coverage report. The reason for today's update is the 1Q 2016 report that has been published last Friday. Since the beginning of the year the size of the portfolio increased from slightly above Euro 500m up to about Euro 530m and currently comprises 50 assets including both the sales recently done in April, namely the logistics property in Bremerhaven and the office building in Dresden.
The published figures underscore our assumptions for the company's growth which we gave with our opening coverage. Last year's acquisitions now fully materialize leading to an enormous year-on-year increase of the rental income from Euro 0.7m to Euro 7.7m. The same effect holds true for the net profit after minorities which was at Euro 1.6m, eightfold compared to the 1Q 2015 figure of Euro 0.2m. We project the portfolio size to increase to at least Euro 700m until the end of the year and the rental income to triple. This translates into our full year FFO I projection of Euro 21m or even slightly above. WCM generated a remarkably positive FFO I of about Euro 4.4m for the first quarter which is a good basis supporting our full year assumption.
We affirm the Accumulate rating and also maintain our target price of Euro 3.25. WCM is a profitable growth story in the German commercial real estate arena. Besides the profitable growth another argument is the high amount of tax loss carry forwards of far more than Euro 500m which secures a very low taxation of future profits for many years. We also welcome the shareholders friendly dividend policy. The management plans to pay out about 50% of the future FFO profits every year to the the shareholders. For any queries regarding our WCM update please do not hesitate to contact us.
WCM will join our 2016 investor event Forum Financials & Real Estate on 8 September at the Frankfurt Hilton. You will find more information and the opportunity for a cost-free registration on www.src-research.de/forum