Original-Research: publity AG (von GBC AG): Hold

Original-Research: publity AG - von GBC AG

Einstufung von GBC AG zu publity AG

Unternehmen: publity AG
ISIN: DE0006972508

Anlass der Studie: Research Report (Note) Empfehlung: Hold
Kursziel: 17.00 EUR
Kursziel auf Sicht von: 31.12.2024
Letzte Ratingänderung:
Analyst: Matthias Greiffenberger, Marcel Schaffer

Focus on sustainable office properties. Positive outlook.  
The business trajectory in the first half of 2023 reflects noteworthy advancements for publity AG despite prevailing challenges in the real estate industry. However, revenues experienced a substantial downturn, decreasing to €2.01 million in the first half of 2023 (compared to €9.95 million in the previous year). These revenues were generated through publity's successful transactions as an asset manager.  
The significant dip in revenue consequently led to a decline in EBITDA to €-1.46 million (compared to €6.63 million in the previous year). On a positive note, other operating income had a notable impact, reaching €1.02 million (a significant increase from €0.03 million in the previous year), primarily stemming from a legal dispute. Overall, operating costs remained predominantly stable, with marginal adjustments in the cost of materials (-2.0%) and a slight uptick in personnel expenses (+3.3%). Conversely, other operating expenses rose to €3.43 million (compared to €2.31 million in the previous year) due to partial revenue from the PREOS convertible bond, transacted below the original price. Adjusted for this effect, costs actually experienced a reduction.
 
Income from other securities witnessed a 14.5% decline to €2.95 million (compared to €3.45 million) owing to the diminished volume of PREOS Global Office Real Estate & Technology AG bonds on the balance sheet. Furthermore, interest and similar expenses increased by 17.7% to €-2.74 million (compared to €-2.33 million) due to the augmentation of the publity bond, issued in the second half of 2022, by €20 million to €97.76 million (compared to €77.76 million in the previous year).  
The sharp decrease in revenue resulted in a negative net result of €-1.53 million (compared to €5.23 million in the previous year).  
publity's financial statement mirrors a typical profile for investment companies, marked by a substantial level of financial assets, notably the shares held in PREOS constituting the majority. Despite the impressive equity interest of 94.3%, these shares in the subsidiary are not fully consolidated but are acknowledged as financial assets. The absence of full consolidation means that the liabilities of the real estate companies GORE and PREOS are not entirely reflected, contributing to publity AG consistently maintaining an above-average equity ratio. Variations in equity stem from both operational business dynamics and the appreciation or depreciation of financial assets. As of June 30, 2023, there was no extensive revaluation of financial assets.  
As of June 30, 2023, equity remained nearly unchanged at €370.66 million (compared to €372.19 million on December 31, 2022), primarily influenced by an annual loss of €1.53 million. Consequently, the equity ratio also held steady at 76.2% (compared to 76.4% on December 31, 2022).  
publity AG's balance sheet prominently features investments in affiliated companies, amounting to €367.3 million (compared to €366.94 million on December 31, 2022), constituting 75.5% of total assets (compared to 75.3% on December 31, 2022). Additionally, publity AG holds bonds from PREOS Global Office Real Estate & Technology AG valued at €81.0 million (compared to €83.98 million on December 31, 2021). These financial assets are encompassed in the net financial assets, totaling €374.81 million (compared to €377.87 million on December 31, 2022).  
The primary component of debt capital is an outstanding publity bond valued at €97.76 million (unchanged from December 31, 2022). This bond matures in 2027, and its terms were adjusted at the end of 2022, including an extension of the term to 19.12.2027 (originally 19.06.2023), an interest rate increase from 5.5% to 6.25% from 19.06.2023, and the introduction of an option for early repayment. As of October 18, 2023, the bond is trading at 28.0% on Tradegate at 15:34. The extension of the publity bond is potentially subject to challenge by bondholders.  
Liabilities to banks remain steady at €4.3 million (unchanged from December 31, 2022), and cash and cash equivalents amount to €0.38 million (compared to €0.54 million on December 31, 2022). The management perceives the liquidity situation as stable. Working capital has significantly increased to €3.39 million, compared to €-0.19 million as of December 31, 2022, primarily attributed to the rise in trade receivables to €4.35 million from €1.16 million as of December 31, 2022. This increase is presumed to be a response to the current challenging situation in the real estate industry, potentially leading customers to exhaust their payment terms.  
Due to the absence of a published cash flow statement, a more comprehensive liquidity analysis is currently unfeasible.  
On August 16, 2023, the Annual General Meeting sanctioned a capital increase from company funds, proposing an augmentation of share capital from €14.88 million to €16.74 million, involving the issuance of 1.86 million new no-par value shares with a nominal value of €1.00 each. However, the finalization of the capital increase is still pending.  
As of December 30, 2022, the share price for the investment in PREOS Global Office Real Estate & Technology AG was €3.40 (Xetra), representing a market capitalization of €385.79 million. Considering publity AG's substantial 94.3% shareholding, the reported value of the held share capital in publity's balance sheet was €363.8 million. However, the PREOS share price has experienced a significant decline since December 30, 2022, currently standing at €0.41 (XETRA, October 23, 2023). This decline poses a notable valuation discount affecting earnings. In our revaluation, we do not rely on the current PREOS share price; instead, we utilize the published equity of PREOS Global Office Real Estate & Technology AG, which amounted to €203.56 million as of December 31, 2022, as a conservative lower limit. Corresponding to the 94.3% shareholding ratio, this equates to a value of €191.96 million.
 
As of June 30, 2022, loans to affiliated companies stood at €81.0 million. These loans are in the form of convertible bonds issued by PREOS Global Office Real Estate & Technology AG in 2019 and maturing in 2024. The current price of the convertible bond is 1.26% (Frankfurt, October 19, 2023). Klaus Nieding, lawyer and Vice President of Deutsche Schutzvereinigung für Wertpapierbesitz, has been appointed as the contact person for the bondholders. The next step involves engaging in discussions with the joint representative to explore potential restructuring options for the PREOS convertible bond. Given the considerable potential for the convertible bond to be written down, we have initially assumed a 50% impairment in our valuation.
 
Despite facing persistent challenges such as high interest rates, increased construction costs, and uncertainties in the economic landscape within the real estate sector, the company remains optimistic about its recovery, attributing this confidence to its position as a green asset manager. In response to macroeconomic challenges and evolving trends in real estate, the company is strategically focusing on sustainable office properties. The goal is to manage at least 50% ESG-compliant buildings by 2030, with a long-term objective of achieving 100%. The approach is holistic, encompassing environmental considerations, innovative design options, and social aspects. publity AG has already secured several certifications for its properties, showcasing high ESG and digitalization standards. Additionally, there are plans to convert the Centurion Tower in Frankfurt into a green office building, serving as a model for the future of office spaces.
 
The corporate strategy of publity AG centers on fortifying and expanding its position as a portfolio holder in the real estate sector through its subsidiaries. The primary focus remains on the German commercial real estate market, where attractive value creation potential is identified. Leveraging its expertise in real estate asset management, publity AG aims to capitalize on the sustained demand for German commercial real estate, particularly from foreign investors.
 
While the impacts of the coronavirus pandemic, the conflict in Ukraine, the energy crisis, and rising interest rates on the company's economic trajectory are challenging to predict, the Management Board anticipates stabilization and positive development.  
The Executive Board expects to break even after taxes in the course of the 2023 financial year, with a slightly positive EBIT forecast. In addition, the Executive Board expects to be able to meet all financial obligations in full and on time in the future.
 
We assume that there will be an increase in real estate transactions in the 2023 financial year compared to the previous year 2022. However, the market is currently heavily impacted by the turnaround in interest rates. For the current financial year 2023, we forecast revenue of €11.5 million, followed by €15.0 million in 2024 and €20.1 million in 2025.  
In accordance with the company's guidance for the 2023 financial year, the Executive Board expects to break even after taxes and achieve a slightly positive EBIT. The company continues to respond with strict cost management in order to meet the current challenges. Our earnings forecasts do not include any potential write-downs on the financial assets held.  
We assume that the guidance can currently be easily achieved. For the current financial year 2023, we expect EBIT of €0.3 million, followed by €3.32 million in 2024 and €6.64 million in 2025.  
Overall, we expect net income of €0.28 million in the current financial year 2023, €2.39 million in 2024 and €4.71 million in 2025.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/28325.pdf

Kontakt für Rückfragen
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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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
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Date and time of completion of the study: 17.11.2023 (12:00) German version: 13.11.2023 (10:00) Date and time of the first publication of the study: 17.11.2023 (12:30) German version: 13.11.2023 (11:30)

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