Emlak Konut REIT (Buy, TRY 2.75)
Thanks to deliveries in the last quarter of 2011, we expect the company to post TRY 96mn net income in 4Q11, which is the highest quarterly figure in 2011, yet down by 64% yoy. Despite the record high pre-sales performance of 12,658 units in 2011 it was the weakest year in terms of net income due to REIT accounting. Since the company can only recognize revenues and costs at delivery, we expect Emlak Konut to post only TRY 189mn net income in 2011, which indicates a 65% decline yoy.
■ The company delivered around 1,400 units in four different projects and sold another 516 units from its existing stock in 4Q11. Thus we expect revenues reach TRY 312mn, the highest quarterly figure this year but down 60% yoy. We expect fewer deliveries from revenue-sharing-model (RSM) projects to result in a lower EBITDA margin of 31% in this quarter vs. 38% in 4Q10. Our EBITDA estimate stands at TRY 98mn.
■ In light of the data releases so far, it is not possible to calculate a 100% comparable NAV for the company, yet according to our calculations, 2011 NAV stands at TRY 7.1bn, which indicates a 24% increase qoq thanks to an increase in year-end appraisals. Due to a lack of comparable data, we still use the last-announced NAV in our discount/premium calculations. Emlak's premium to NAV stands at 1% currently which is slightly below the 7% average since the IPO.
■ The high delivery momentum in 4Q11 will continue in 2012 and 2013 thanks to the tenders held in 2010. Thus, after weak results in 2011, we believe net income will surge more than 100% in 2012. We also expect the strong pre-sales performance to continue in 2012 and total pre-sales to be around 14,500-15,000 units.
■ We have a Buy rating for the stock with a TRY 2.75 target price offering 21% upside. The major catalysts for the company are still the launch of new projects, new land acquisitions and new RSM tenders.UniCredit