DEFAMA Deutsche Fachmarkt AG
A convincing FY 22e outlook
We confirm our Buy rating and our PT of EUR 32.50 after the compa ny reported record FY 21 prelims and a convincing FY 22e outlook. FY 21 sales increased by 17% yoy to EUR 17.0m (M´e: EUR 17.2m) while the FFO grew by 20% yoy to EUR 7.1m (M´e: EUR 7.3m). The strong FY 22e FFO guidance points to a continuation of the growth story: the FFO should come in at EUR 8.5m in FY 22e, implying FFO growth of almost 20% yoy, and the annualized FFO should amount to EUR 10m at the end of the year (currently ~EUR 8.5m). Portfolio ex pansion should remain the key driver behind sustained FFO growth going forward but also investments into the existing portfolio are ex pected to be FFO accretive to a smaller extent. In this context, we es timate that the annual acquisition volume could come in at least at the high end of DEFAMA´s EUR 15m-20m annual acquisition target in FY 22e and beyond. Considering the expectable strong acquisition dealflow of the company, we also believe that DEFAMA´s FY 25e tar gets, namely an FFO of EUR 11m and annualized rents of EUR 24m, appear to be conservative and could be updated in the foreseeable future. In summary, DEFAMA continues to provide investors an at tractive growth story (18.4% FFO CAGR 20-23e) in a defensive niche of the German property market and we have an unchanged positive stance on the investment case.
- We increase our FY 22e FFOPS estimate by ~2%, reflecting DEFAMA´s better than expected FY 22e outlook.
- Valuation: DEFAMA trades at a P/FFO 23 multiple of 12.7x, its peers at 14.4x.
(DEF GY) | Real EstateMarch 01, 2022
Buy | unchanged | |
Price* | EUR 28.00 | |
Price target | EUR 32.50 | (unchanged) |
- XETRA trading price at the close of the previous day unless stated otherwise in the Disclosures
Market Cap (EUR m)1 | 124 |
Enterprise Value (EUR m)1 | 265 |
Free Float (%)1 | 65.0 |
Price (in EUR)1
Fundamentals (in EUR m)1 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | Performance (in %)1 | 1m | 3m | 12m |
Sales | 9 | 11 | 15 | 17 | 20 | 23 | Share | -0.7 | 8.5 | 44.3 |
EBITDA | 6 | 7 | 9 | 13 | 13 | 14 | Rel. to Prime All Share | 7.0 | 16.7 | 40.9 |
EPS adj. (EUR) | 0.46 | 0.51 | 0.57 | 1.14 | 0.84 | 0.94 | ||||
FFO | 3.6 | 4.6 | 5.9 | 7.1 | 8.5 | 9.7 | Changes in estimates (in %)1 | 2021e | 2022e | 2023e |
DPS (EUR) | 0.40 | 0.45 | 0.48 | 0.51 | 0.54 | 0.58 | Sales | -1.2 | 1.0 | 0.0 |
Operating Cash Flow (EUR) | 3 | 4 | 5 | 7 | 8 | 8 | EBIT | -2.3 | 1.8 | 0.0 |
Dividend paid (EUR) | 1 | 2 | 2 | 2 | 2 | 3 | EPS | -4.0 | 2.7 | 0.0 |
Capital expenditures (EUR) | 31 | 16 | 38 | 30 | 20 | 20 | Sponsored Research | |||
Ratios1 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | ||||
EV/EBITDA | 19.6 | 19.4 | 21.5 | 18.4 | 21.0 | 19.6 | Author: Stephan Bonhage | |||
PCFR | 8.7 | 10.5 | 10.9 | 10.5 | 10.9 | 9.6 | ||||
P/E adj. | 25.9 | 32.5 | 34.8 | 24.4 | 33.2 | 29.8 | Financial Analyst Equities | |||
Dividend yield (%) | 3.3 | 2.7 | 2.4 | 1.8 | 1.9 | 2.1 | ||||
EBIT margin (%) | 39.5 | 40.1 | 38.6 | 55.4 | 40.2 | 39.8 | ||||
Gearing (%) | 396.8 | 281.7 | 420.5 | 432.9 | 430.7 | 430.5 | ||||
PBV | 2.7 | 2.8 | 3.5 | 4.3 | 3.8 | 3.5 | 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. 50% 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.
Valuation
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 31.12.2021, DEFAMA´s property portfolio com prised 50 properties.
Major shareholders
Matthias Schrade (29%), Geminus GmbH (4%), Other management (2%)
Key figures | ||||||||||||
P&L (in EUR m) | 2018 | % | 2019 | % | 2020 | % | 2021e | % | 2022e | % | 2023e | % |
Sales | 9 | 55.9 | 11 | 23.3 | 15 | 30.1 | 17 | 16.6 | 20 | 17.6 | 23 | 13.0 |
EBITDA | 6 | 42.3 | 7 | 27.3 | 9 | 27.6 | 13 | 50.2 | 13 | -6.5 | 14 | 13.0 |
EBITDA margin (%) | 60.9 | -8.7 | 62.9 | 3.2 | 61.7 | -1.9 | 79.4 | 28.8 | 63.1 | -20.5 | 63.1 | 0.0 |
EBIT | 4 | 34.5 | 4 | 25.3 | 6 | 25.1 | 9 | 67.4 | 8 | -14.6 | 9 | 11.9 |
EBIT margin (%) | 39.5 | -13.8 | 40.1 | 1.6 | 38.6 | -3.8 | 55.4 | 43.6 | 40.2 | -27.4 | 39.8 | -1.0 |
Financial result | -1 | -49.0 | -2 | -28.7 | -2 | -23.9 | -3 | -22.1 | -3 | -17.6 | -3 | -12.3 |
EBT | 2 | 27.1 | 3 | 23.3 | 3 | 25.8 | 7 | 95.0 | 5 | -26.9 | 6 | 11.6 |
Taxes | -1 | -34.3 | -1 | -28.7 | -1 | -38.7 | -2 | -79.9 | -1 | 29.7 | -1 | -11.6 |
Tax rate (%) | -24.5 | n.a. | -25.6 | n.a. | -28.2 | n.a. | -26.0 | n.a. | -25.0 | n.a. | -25.0 | n.a. |
Net income | 2 | 25.0 | 2 | 21.5 | 3 | 21.4 | 5 | 101.0 | 4 | -25.9 | 4 | 11.6 |
Minority interests | 0 | n.m. | 0 | -48.8 | 0 | -62.9 | 0 | 169.7 | 0 | 0.0 | 0 | 0.0 |
Net Income after minorities | 2 | 23.4 | 2 | 22.5 | 3 | 21.9 | 5 | 100.9 | 4 | -26.0 | 4 | 11.7 |
Number of shares outstanding (m) | 4 | 2.1 | 4 | 11.9 | 4 | 9.1 | 4 | 0.0 | 4 | 0.0 | 4 | 0.0 |
EPS adj. (EUR) | 0.46 | 20.7 | 0.51 | 9.5 | 0.57 | 11.7 | 1.14 | 100.9 | 0.84 | -26.0 | 0.94 | 11.7 |
DPS (EUR) | 0.40 | 17.6 | 0.45 | 12.5 | 0.48 | 6.7 | 0.51 | 6.3 | 0.54 | 5.9 | 0.58 | 7.4 |
Dividend yield (%) | 3.3 | n.a. | 2.7 | n.a. | 2.4 | n.a. | 1.8 | n.a. | 1.9 | n.a. | 2.1 | n.a. |
Cash Flow (in EUR m) | 2018 | % | 2019 | % | 2020 | % | 2021e | % | 2022e | % | 2023e | % |
Operating Cash Flow | 3 | 24.1 | 4 | 11.1 | 5 | 30.6 | 7 | 37.0 | 8 | 10.3 | 8 | 12.0 |
Increase in working capital | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. |
Capital expenditures | 31 | 42.1 | 16 | -48.4 | 38 | 135.7 | 30 | -21.7 | 20 | -32.7 | 20 | 0.0 |
Dividend paid | 1 | 70.0 | 2 | 29.4 | 2 | 27.5 | 2 | 6.7 | 2 | 6.3 | 3 | 13.7 |
Free cash flow (post dividend) | -29 | -45.6 | -14 | 52.2 | -35 | -152.3 | -25 | 28.4 | -15 | 41.0 | -14 | 4.0 |
Balance sheet (in EUR m) | 2018 | % | 2019 | % | 2020 | % | 2021e | % | 2022e | % | 2023e | % |
Assets | 86 | 54.8 | 104 | 21.6 | 137 | 31.1 | 160 | 16.8 | 178 | 11.4 | 196 | 10.1 |
Goodwill | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. | 0 | n.a. |
Shareholders' equity | 16 | 43.9 | 25 | 50.7 | 25 | 2.1 | 29 | 15.5 | 33 | 12.4 | 36 | 10.1 |
Net Debt incl. Provisions | 65 | 60.2 | 70 | 7.0 | 106 | 52.4 | 126 | 18.9 | 141 | 11.8 | 155 | 10.1 |
Gearing (%) | 396.8 | n.a. | 281.7 | n.a. | 420.5 | n.a. | 432.9 | n.a. | 430.7 | n.a. | 430.5 | n.a. |
Net debt/EBITDA | 11.7 | n.a. | 9.9 | n.a. | 11.8 | n.a. | 9.3 | n.a. | 11.2 | n.a. | 10.9 | n.a. |
Structure
Tenant strucutre 2020
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) | |||||
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 |
19.05.2021 | Buy | Buy | 20.00 EUR | 23.00 EUR | Bonhage, Stephan |
30.04.2021 | Buy | Buy | 19.50 EUR | 23.00 EUR | Bonhage, Stephan |
01.03.2021 | Buy | Buy | 19.40 EUR | 23.00 EUR | Bonhage, Stephan |
Issuer/Financial Instrument (ISIN): Deutsche Konsum REIT-AG (DE000A14KRD3) | |||||
15.02.2022 | Buy | Buy | 13.35 EUR | 17.60 EUR | Bonhage, Stephan |
20.12.2021 | Buy | Buy | 14.00 EUR | 17.60 EUR | Bonhage, Stephan |
09.12.2021 | Buy | Buy | 14.10 EUR | 17.90 EUR | Bonhage, Stephan |
04.10.2021 | Buy | Buy | 14.40 EUR | 17.90 EUR | Bonhage, Stephan |
13.08.2021 | Buy | Buy | 14.65 EUR | 17.90 EUR | Bonhage, Stephan |
18.06.2021 | Buy | Buy | 15.15 EUR | 17.90 EUR | Bonhage, Stephan |
17.05.2021 | Buy | Buy | 15.20 EUR | 17.90 EUR | Bonhage, Stephan |
19.03.2021 | n.a. | Buy | 15.55 EUR | 17.90 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: March 01, 2022 09:28 AM CET
Initial release: March 01, 2022 09:28 AM CET
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Sensitivity of valuation parameters; risks
The figures on which the company valuations are based are date-specific estimates and thus carry inherent risks. They may be adjusted at any time without prior notice.
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Defama Deutsche Fachmarkt AG published this content on 01 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2022 09:07:06 UTC.