Gibt eine gute Übersicht. Aktuelle Risiken werden auch sehr gut beschrieben.
Vonovia SE (Buy, TP=€28.5) - 12m target downgrade - Time to deliver on targeted disposals, Buy rating reiterated - M. Pastou (20p)
We update our estimates following FY22 results, rolling forward our estimates to 2025, and reiterate our Buy rating on the c.76% 12m TSR implied by our new TP of €28.5. We look at Vonovia’s plan to delever via targeted disposals and assess the level of disposals required to achieve target ranges. We also review the company’s methods for preserving capital, address near-term debt refinancing needs and what has already been covered, and analyse the impact of further declines in portfolio value. While we acknowledge risks around Vonovia’s near-term debt refinancing requirements, we think the recent negative share price performance (-30% over the past month vs -16% across our Real Estate coverage), the wide discount to underlying NAV (71% to FY22) and double-digit recurring earnings yield (13.3% FY23e) all make for an attractive entry point.
Disposals to support deleveraging efforts remain the key catalyst
Considering the solid base offered by Vonovia’s rented resi portfolio (>80% of its FY22 EBITDA), we believe that cementing a sizable disposal to address near-term refinancing needs and delever remains critical to assuaging investors’ balance sheet concerns. Management is confident it can achieve its target of €2bn FCF from disposals this year based on current negotiations. But real progress has been limited to date, although it does have a range of possible disposal options (incl. commercial assets and the nursing home business). Given the wide 34% implied discount to GAV, we think a disposal at a single-digit discount to appraised value would also be positive. Furthermore, we think extensions of existing bank financing (a €550m secured loan in 1Q was a rollover of existing financing, for example) and/or a larger secured financing package to support upcoming unsecured bond refinancing needs would be supportive.
Risks to the investment case
Management confirmed on the 17 March FY22 results call that c.€800m of Vonovia’s FY23 refinancing needs had yet to be addressed. Adjusting for the cash element of the FY22 dividend payment and assuming existing secured financing is extended as planned, we get to roughly half this amount. However, a further c.€2bn of unsecured bonds will need to be refinanced next year. While Vonovia could maintain a thin capex programme to retain cash, market fears around future dividend cuts and a potential rights issue remain (not part of our base case) and we estimate disposals after this year’s plan will be necessary.
These risks appear fully discounted
Vonovia shares trade at a 71% discount to FY22 EPRA NTA (66% to SGe FY23), the mid-point of peers, and a 13.3% FY23e recurring EPS yield. Across the sectors we cover, German resi (incl. Vonovia) offers the widest discount to both NAV and GAV, and the highest FY23e earnings yield. Our €28.5 TP is based on a fundamental valuation derived 50:50 from our €38.0 NAV (prev. €43.5) (incl. a 20% discount) and a €17.0 DCF (prev. €18.5, 2.0% long-term growth). We apply a 3.2% premium to reflect ESG and liquidity.
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