Original-Research: www.warimpex.com (von East Value Research GmbH ):

Classification of East Value Research GmbH to www.warimpex.com

Company Name:	www.warimpex.com
ISIN:	AT0000827209
Reason for the research:	Update
Target price:	EUR 1,60
Target price on sight of:	12-months
Last rating change:
Analyst:	Adrian Kowollik

Warimpex’ (WXF) Q2/24 results were negatively affected by write-downs of receivables and a loss from remeasurement of investment property of EUR 9.9m, which in our view were both related to the company’s Russian properties. However, total revenues (+4% vs. -6.3% y-o-y in Q1/24) and EBITDA margin (34.6% vs. 31.3%) showed an improvement q-o-q. In H1/24, the main issue was the Investment properties segment, which continues to be negatively affected by a weak Russian rouble. Based on WXF’s latest financial report, we have slightly increased our revenue estimate by c. 3% but slashed our profit estimates for 2024E-2025E again. Nevertheless, due to a higher peer-group-based fair value (EUR 1.52 vs. EUR 1.44 before) our 12-months PT (50% NNNAV that we have additionally discounted by 50% due to the exposure to Russia, 50% peer group) for Warimpex goes up to EUR 1.60 (previously: EUR 1.58). While ECB’s rate cuts make raising debt for WXF cheaper and increase the likelihood of rising property prices, the biggest issue remains the company’s exposure to Russia, where it still has 36% of its Gross Asset Value and where, in our view, it generates by far the highest rental yields of c. 15%.

In H1/24, the main factors affecting Warimpex’ results included:  1. Higher occupancy rates in the Hotels segment 2. Weaker Russian rouble 3. Higher operating costs 4. Write-downs of trade receivables and 5. Loss from remeasurement of investment property. Total revenues equalled EUR 26m (-1.1% y-o-y) and EBITDA was 23.8% below last year. Due to the remeasurement loss EBIT and net income declined to EUR -2.1m and EUR -8.8m respectively. At the end of June 2024, WXF had net debt of EUR 216m (31/12/23: EUR 210.3m, 30/06/23: EUR 213.3m). In July, it sold the MC55 office development project in Bialystok with, we believe, a profit of c. EUR 700k.

While its Mogilska 35 office building that was opened in Q4/23 will likely be fully occupied by the end of 2024E, Warimpex now concentrates its development activity on the Chopin (in Cracow, with a building permit), West Yard (Darmstadt, building permit likely in H2/24E) and Mogilska IV (Cracow, least developed) projects. WXF will start the construction of the projects with a building permit at a suitable time, dependent on market conditions.
 

You can download the research here: http://www.more-ir.de/d/30823.pdf
For additional information visit our website: https://eastvalueresearch.com/

Contact for questions:
Adrian Kowollik
Tel.: +49 30 20609082
Email: ak@eastvalueresearch.com