Original-Research: DEMIRE AG (von NuWays AG): Buy

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Original-Research: DEMIRE AG - from NuWays AG

08.11.2024 / 09:07 CET/CEST

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Classification of NuWays AG to DEMIRE AG

Company Name: DEMIRE AG

ISIN: DE000A0XFSF0

Reason for the research: Update

Recommendation: Buy

from: 08.11.2024

Target price: EUR 1.50

Target price on sight of: 12 months

Last rating change:

Analyst: Philipp Sennewald

Rental income decreased due to smaller property portfolio, chg.

Q3 rental income declined 20% yoy to EUR 15.2m (eNuW: EUR 16.0m), caused by the

lower asset base following larger disposals as well as the deconsolidation

of the Limes portfolio in July (eNuW: EUR 8.4m annual rental income). Despite

a strong letting performance in the first nine months (+121% yoy) we also

saw a decreasing like-for-like contractual rental income (-3.2%), which was

mainly case by the increased vacancy rate of 14.7% (vs 13.1% at YE '23)

following the insolvency of Mein Real in Querfurt. This was only partly

offset by indexation effects concerning existing rental agreements. Yet, we

also already saw a sequential improvement in the vacancy rate of 0.8pp in

Q3. We regard the strong letting performance as a sign of operational

strength as we observe a continuous weakness of the letting markets.

On this basis, we also saw a 12% yoy FFO decrease to EUR 7.5m (eNuW: EUR 7.3m),

driven by negative operating leverage which was only slightly offset by an

improved rental margin. Yet, an improved FFO margin of 50% shows that DMRE

is able to display strong operating performances despite the significantly

lowered asset base.

Against this backdrop, management confirmed the FY guidance targeting sales

of EUR 64-66m (eNuWnew: EUR 66.1m) as well as a yoy decline in FFO (eNuWnew: EUR

28.4m vs EUR 36.7m in FY '23).

Limes update. Following the insolvency of the Limes subsidiaries, management

reiterated during the CC that it expects the assets to remain stable in

value (eNuW: EUR 140m with 57% LTV). Hence, there could be upside to our

estimates as we conservatively included a total loss for the company in our

model.

Disposal engine running. Following two larger disposals in Ulm and Leipzig,

management confirmed in the CC that it expects 3 additional smaller deals to

be closed until YE '24e as well as several assets do be disposed in FY '25e.

Although it is hard to get a grip on the exact volume, management was

confident to dispose assets with a volume of up to EUR 50m until YE '25e,

which is however below our current estimate of EUR 99m (GAV).

The stock remains undervalued given the significant and, in our view,

unjustified NAV discount of 73%. Hence, we reiterate BUY with an unchanged

PT of EUR 1.50 based on NAV.

You can download the research here: http://www.more-ir.de/d/31227.pdf

For additional information visit our website: www.nuways-ag.com/research

Contact for questions:

NuWays AG - Equity Research

Web: www.nuways-ag.com

Email: research@nuways-ag.com

LinkedIn: https://www.linkedin.com/company/nuwaysag

Adresse: Mittelweg 16-17, 20148 Hamburg, Germany

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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss

bestimmter Börsengeschäfte.

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

analysierten Unternehmen befinden sich in der vollständigen Analyse.

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