The Company’s solid fundamentals, confirmed by the results for the first nine months of 2018, along with the NNNAV of €11.25 and the consensus target price of €8.89 per share at 6 November, are all elements which indicate that, at current levels, IGD’s stock should provide good upside.
In 2018 IGD’s shareholders also benefitted from a significant payout as on 11 June a dividend for 2017 of €0.50 per share was paid on all outstanding shares, including those issued as a result of the last capital increase.
IGD vs. FTSE Italy All-Share Index and EPRA/NAREIT Europe Index (base 2.1.2018=100)
Source: Italian Stock Exchange and EPRA data compiled by IGD
In a financial market environment dominated by a number of uncertainties, which caused both the Italian and the European real estate indices to fall below the levels recorded at the beginning of the year, IGD’s stock dropped noticeably.
Even though the capital increase, which was successfully completed in April, could have impacted the stock’s performance in 2018 as a result of the short-term dilution of the FFO per share, it is important to point out that the results recorded in the last two quarters showed that the new assets added to the portfolio following the ECP acquisition had an immediate positive impact on cash flow generation. The numbers published by IGD in 2018 confirm the solidity of the fundamentals, in terms of both operations and financial management.
Before the publication of the results for the first nine months of 2018 and the presentation of the new Business Plan, the consensus target prices of the analysts covering the stock, updated on 6 November, was €8.89.
If we compare the stock price at 6 November with the most recent NNNAV (€11.25), based on the updated appraisals at 30 June, the stock is trading at a discount of around 46%
Which elements could push the market to close this gap to some degree?
If the publication of the last quarterly results allowed IGD to confirm the FY 2018 target for growth in FFO of at least 20%, which confirmed the prospects for brilliant annual results, the elements in the Business Plan 2019-2021 should confirm the solidity and the profitability that IGD intends to pursue in the medium-term.
The recovery in the stock price against the lows hit mid-October already seen over the past few weeks seem to indicate that the market is willing to focus on the fundamentals and begin, therefore, to rerate the stock which will result in IGD trading at less compressed multiples.