7 August 2018 14:38

The solid fundamentals indicate there is ample upside potential

IGD’s stock performance has been volatile since the beginning of 2018: the capital increase –which was successfully completed – was carried out in a market environment that was less favorable to equity investments than when the transaction was announced last December.

The stock has provided shareholders with interesting returns in 2018 thanks to the 2017 dividend of €0.50 per share paid on all shares ouststanding at 11 June, including the ones issued as a result of the capital increase.

At current levels, which are already 5% higher than the lows recorded at the end of May, IGD’s stock offers significant upside given  both the strong discount with which it is trading against its NAV and the consensus target price.

IGD vs. FTSE Italy All-Share Index ed EPRA/NAREIT Europe Index (base 2.1.2018=100)

Source: Italian Stock Exchange and EPRA data compiled by IGD


After closing 2017 with an increase of 33.1%, the performance of IGD’s stock has been volatile in 2018 as a result of the €150 million capital increase, which was successfully completed on 18 April, and a market environment which has proven to be more complicated than expected at the end of last year.

Up until now there has been greater uncertainty in 2018: on the one hand, the tapering of the expansive monetary policies by central banks at a time when inflation is gradually increasing fueled a rise in the price of oil; on the other hand, more recently, growth projections for the Euro zone have been revised downward.  Visibility is also hindered by concerns over the outcome of the trade war between the United States and China. In Italy there are additional uncertainties linked to the economic policies of the new government, in place since the beginning of June, at a time when the estimates for GDP growth in 2018-2019 have been lowered by the largest forecasters.

In a similar environment, the good results for FY 2017 and the first quarter of 2018 confirmed the solidity of IGD’s fundamentals and in the weeks following publication of the results the stock recovered ground.  The recovery failed, however, to prevent the stock from returning to trade at very low multiples.

After the payment on June 11 of a dividend of €0.50 per share, in July IGD’s stock price had some mini-rallies: a sign that investors are increasing their focus of on the Company’s solid fundamentals which the half-year results can only strengthen.

The independent appraisals made at 30 June 2018 point to a NNNAV per share of €11.25, while the average consensus target price of brokers covering the stock is €9.51: these levels are well above the current stock price which indicates that the stock has ample upside potential.

In the current environment the expectations are that interest rates will remain low, economic growth will continue and consumption will remain solid: the conditions exist, therefore, for IGD to continue to generate convincing economic-financial results, as well as return to trading at multiples which reflect the ability to generate strong cash flow expressed in the FFO and closer to the independent experts’ NNNAV.