Original-Research: Warimpex Finanz- und Beteiligungs AG (von East Value Research GmbH)
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Original-Research: Warimpex Finanz- und Beteiligungs AG - from East Value Research GmbH
Classification of East Value Research GmbH to Warimpex Finanz- und Beteiligungs AG
Based on our discussions with management, we believe that Warimpex ’ (WXF) 2024 results, which will be released on April 29, will be weaker on all levels than we had previously forecast. Although it finally got rid of all Russian assets in October 2024 and due to interest rate cuts in the Eurozone and CEE the environment for real estate companies is getting better, management believes that 2025E will be a transition year for the company. Currently, the focus is on increasing occupancy rates and debt repayment. Also, the company now plans to construct apartments on one of its land plots in Cracow (Mogilska IV with c. 9,000 sqm, 10 min away from Cracow central station), which is a booming city with c. 790,000 inhabitants and 2nd highest sqm apartment prices in Poland (PLN 13,917 on average or EUR 3,314). Construction activity related to the office projects in Cracow/Chopin project and Darmstadt/West Yard has not started yet. Given a higher peer-group-based fair value of EUR 0.68/share (prev. EUR 0.48), our new 12-months PT for Warimpex (50% NNNAV, 50% peer group) equals EUR 1.14 (previously: EUR 1). The main risk factor is the company’s net gearing, which despite being mostly related to long-term debt is still high. Although we had previously accounted for the one-off loss of EUR 67.4m related to the sale of Russian assets in October 2024 - in total 53,100 sqm, c. 36% of WXF’s Gross Asset Value until September 2024 - we have decided to lower our 2024E estimates again by 10.2%-34.2% on revenue and EBITDA level. They now equal EUR 21.9m (prev. EUR 24.4m) for revenues, EUR 1.8m (EUR 2.8m) for EBITDA and EUR -82m (EUR -79.8m) for net income. We expect that due to the negative effect from the one-off loss on equity net gearing as of 31 December 2024 amounted to 194.4% (31/12/2023: 174.4%). We believe that the decision to build apartments on the Mogilska IV land plot stems from the fact that apartments can be built and sold relatively quickly (it usually takes c. 1.5 years to complete a residential real estate project with a building permit). This would allow Warimpex to generate significant cash, including from prepayments, which could be used for debt repayment. Currently, WXF rents own office space in Cracow, Lodz and Budapest and operates 1 hotel in Darmstadt (in the Intercontinental in Warsaw, it owns a 50% stake). Warimpex wants to start construction of the planned new office projects - Chopin in Cracow with c. 20,600 sqm and West Yard in Darmstadt with c. 11,500 sqm, both already have a building permit – as soon as market conditions improve. You can download the research here: http://www.more-ir.de/d/32346.pdf For additional information visit our website: https://eastvalueresearch.com/ Contact for questions: Adrian Kowollik Email: ak@eastvalueresearch.com Tel.: +49 30 20609082
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