FY11 earnings came in north of 1H11 guidance and KBCS at € 11.3m, while a € 2.0 DPS proposal is in line with our forecast. FY12 outlook is prudent, though the delivery of office buildings sold in FY11 and apartment sales should support FY12 results. We stick to our Hold rating and € 34 TP.
News:
On the quant side we highlight: i) EPS was written in black again at € 2.25, north of KBCS (€ 1.14) and up vs. a € 0.32 p.s. loss in FY10. The swing to positive territory was driven by € 26.2m turnover related to the transfer of the first two blocks of the UP-site complex and revenues from Crowne Plaza. Net financial result dropped 30% y/y to -€ 3.09m and includes costs related to the bond issue. ii) The operating result soared to € 13.51m (FY10: € 3.48m) due to selling Media Gardens and the partial delivery of UP-site and a € 2.3m receipt of the Congo receivable. iii)As anticipated the dividend will be set at € 2.00, equal to a FY10 DPS of € 2.0 and implying a yield of 6.7%. iv)FY12 guidance is prudent with revenues expected from delivering office building and selling apartments. v) A 3-year stock option was approved, under which 50,000 options were granted that vest in April 2016 (strike: € 23.46).
Our View:
Though FY11 was a transition year, results came in north of our FY11 scenario as it included part of the projected FY12 income. We believe Atenor successfully planted the seeds for future earnings generation via completing infrastructure works in Bucharest and Budapest, the acquisition of HF Immobilier and a 5.4 ha-plot in Anderlecht (Immobiliere de la Petite île) as well as the application for a number of building permits (Trebel, Port du bon Dieu). The press release didn’t unveil new milestones (e.g. pre-lettings) in 2H11 though management highlights the excellent location of all 10 projects under development that span over 500,000 sqm. We will be looking for the traditional management comments during next week’s analyst meeting (12 March)to get a better feeling on the outlook and mainly as to the timing of profit generation on the existing projects (primarily the CEE projects, South City). In terms of the unchanged € 2.0 DPS, we have previously labelled this level as more attuned to the medium-term profit outlook (which takes into account that ongoing investments are estimated to bear fruit between 2013-2015). The 6.7% yield is a bit elevated as the stock dropped on concern over Atenor’s liability to judicial investigations into liquidity companies (note that a recent judge’s ruling was in favour of Atenor). Hence, we don’t regard the DPS payout as excessive relative to earnings.
Conclusion:
The FY11 release confirms our constructive view on the shares in the medium term (solid balance sheet, attractive land positions, anti-cyclical approach). For the moment, we stick to our TP and rating. We note that the stock in the wake of a positive outcome in one of the legal dossiers was rebounded to approx. € 30.2 versus a € 21.3 p.s. low.