Original-Research: publity AG - von GBC AG

Einstufung von GBC AG zu publity AG

Unternehmen: publity AG
ISIN: DE0006972508

Anlass der Studie: Research Report (Initial Coverage)
Empfehlung: BUY
Kursziel: 46.50 EUR
Kursziel auf Sicht von: 31.12.2023
Letzte Ratingänderung: 
Analyst: Matthias Greiffenberger, Marcel Schaffer

Highly profitable asset manager with proprietary research tool and
above-average transaction speed. PREOS shareholding to be reduced in the
medium term from 93.1% to around 20%.
publity AG is an asset manager that mainly generates revenues through
commissions for finding (finder's fee), managing (basic fee) and selling
(exit fee) properties. Managing here refers to the so-called manage-to-core
strategy, in which the focus is on improving the rental situation and
rental yields. Extensive information on the approximately 9,500 relevant
properties in Germany is tracked, maintained and analyzed using a
proprietary research tool. The standardized and formalized processes enable
very rapid transactions, which represents an important competitive
advantage. The company's current focus is on commercial properties in
A-locations in the metropolitan areas of the top seven cities (excluding
Berlin). The main customer is PREOS Global Ofce Real Estate & Technology
AG (PREOS) in which publity holds a 93.1% stake. PREOS is an active real
estate investor whose management acts autonomously and largely
independently of publity.
In the past fiscal year 2021, revenues increased by 79.6% to EUR28.75 million
(previous year: EUR16.01 million). The increase in revenue is mainly due to
finder's fees and basic fees, as well as the procurement of a new major
investor for PREOS. Earnings improved disproportionately and EBIT rose by
140.9% to EUR14.15 million (previous year: EUR5.87 million). The reason for
this is the absence of special costs from the previous year and cost
optimization measures. Impairment losses on financial assets, in particular
on the PREOS shares held, amounting to EUR27.47 million, resulted in a
clearly negative financial result of EUR-24.83 million (previous year: EUR6.17
million). The impairments did not reduce liquidity and are attributable to
the general market trend. As a result, the net result for the year was
EUR-15.43 million (previous year: EUR12.08 million).
In the first half of 2022, revenues decreased slightly by 14.1% to EUR9.95
million (PY: EUR11.59 million). According to the management, revenue mainly
consisted of inventory fees and finder's fees. In contrast to the revenue
development, EBIT increased by 26.5% to EUR6.35 million (previous year: EUR5.02
million). The background to this development was cost optimization.
However, additional costs will be incurred in the second half of 2022, e.g.
due to the Annual General Meeting and consulting costs in the course of the
bond issue. Overall, the result for the period increased by 13.9% to EUR5.23
million (previous year: EUR4.59 million). 
The guidance for the current fiscal year is for revenues moderately above
the previous year's level, with EBIT of between EUR11 million and EUR15 million
and net income of EUR6 million to EUR10 million. We expect revenues of EUR23.2
million in the current fiscal year 2022, followed by EUR25.52 million in
2023. The commercial real estate sector in A-locations should be well
positioned and less affected by the interest rate turnaround and rising
energy prices than the rest of the real estate sector. In the medium term,
we expect broader client diversification with additional mandates outside
PREOS. It is also possible that a joint venture with an American hedge fund
could be entered into again. It would also be conceivable to acquire
further asset managers or to expand the NPL portfolio. It would also be
possible to set up a vehicle of our own to make smaller real estate
investments. In our opinion, the company has numerous growth opportunities
even in the current phase of the interest rate turnaround. With the
continuation of the lean management approach, it should also be possible to
further increase earnings and we expect EBIT of EUR12.65 million in the
current fiscal year 2022, followed by EUR13.56 million in 2023. With the
issue of the further bond, the interest burden should increase
significantly and we forecast net income of EUR9.91 million in 2022, followed
by EUR5.64 million in 2023.
publity AG plans to issue a further bond (2022/2027) with a volume of up to
EUR100 million. The coupon is expected to be 6.25%. The proceeds from the
issue are to be used to finance further growth and to acquire real estate
and equity investments.  The terms and conditions of the existing 2020/2025
bond have been adjusted so that the maturity date also falls on December
19, 2027 and the coupon will also be raised from 5.5% to 6.25% from June
19, 2023. 
Furthermore, an extensive transaction is planned in which PREOS will
receive a new major shareholder and publity's stake will be reduced from
initially 51% to ultimately 20%. For this purpose, capital increases in
kind are to be carried out in the PREOS subsidiary GORE and then the new
shares of GORE are to be contributed to PREOS. A non-cash capital increase
of EUR480 million and another of EUR1.75 billion are planned. The capital
increase in kind in GORE is to be carried out at EUR3.00 per share each and
the contribution of the GORE shares to PREOS is to be carried out at EUR5.20
per share each. Extraordinary shareholders' meetings have already been held
for the first capital increase in kind and the contribution, but actions
for annulment and rescission are still pending. However, this should only
slightly delay the schedule. In our forecasts, we still assume the current
corporate structure, in which publity holds 93.1% of the PREOS shares.
We have valued the company using a DCF model and attributed the investments
in affiliated companies and the loans to affiliated companies to net
financial assets. This primarily includes the PREOS investment. The net
financial assets of EUR576.86 million as of June 30, 2022 would result in a
fair value of EUR38.78 per share based on the number of shares in publity.
Adding the value of the operating business on the basis of the DCF model,
we have calculated an overall price target of EUR46.50 per share and, against
the backdrop of the high upside potential, assign a Buy rating.

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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben
analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen
Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung
Date and time of completion of the study: 04.11.2022 (15:15) German version: 04.11.2022 (09:55)

Date and time of the first distribution of the study: 07.11.2022 (10:00) German version:
07.11.2022 (10:00)

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