(Scale All Share, Real Estate)
Transcript of (Scale All Share, Real Estate)
Noratis (Scale All Share, Real Estate)
A n a l y s t
Phi l ipp Kaiser [email protected]
+49 40 309537-260
A n a l y s t
Andreas Plä[email protected]
+49 40 309537-246
NO T E Published 11.06.2020 08:15 1
RESEARCH
Buy
EUR 27.50 (EUR 25.00)
Price EUR 21.70
Upside 26.7 %
Value Indicators: EUR Share data: Description:
DCF: 27.50
Bloomberg: NUVA GR
Reuters: NUVG.DE
ISIN: DE000A2E4MK4
Developer for existing residential property in German second/third tier locations
Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2020e
Market cap: 86.7
No. of shares (m): 4.0
EV: 348.7
Freefloat MC: 40.8
Ø Trad. Vol. (30d): 31.38 th
Freefloat 47.1 %
Terratis (O. C. Smits) 11.4 %
I. C. Bugarski (CEO) 7.5 %
Merz Real Estate GmbH 34.0 %
Beta: 1.4
Price / Book: 1.4 x
Equity Ratio: 18 %
Net Fin. Debt / EBITDA: 37.5 x
Net Debt / EBITDA: 37.5 x
Growth acceleration set to stabilise overall revenues in future; PT up
Stated Figures 2019: Comment on Figures: � Property sales (EUR 63.0m) mainly driven by the sale of the Frankfurt
portfolio in H1 and some smaller privatisations in H2
� Rental income (EUR 12.9m) increased by 63% mainly because the entire Ratzeburg portfolio (355 units) remained in the portfolio
� Noratis plans to pay a dividend of EUR 0.80 per share for 2019 resulting in a dividend yield of 3.6%
Noratis AG had an eventful start to the year 2020. Besides solid FY 2019 figures, the company has a new major shareholder which significantly
increases the company’s financial flexibility and thus enables high growth potential in a short time. Despite the current uncertainty, we see
good opportunity to significantly expand the size of the portfolio.
� FY 2019 figures: In 2019, Noratis acquired 955 units (WRe: 858 units) and sold 339 units (WRe: 369 units). The company also announced
the establishment of regional subsidiaries to secure further growth and strengthen its involvement in particularly attractive markets. EBT
declined only slightly, by 5%, mainly due to the expected margin normalisation which became visible in H1.
� New major shareholder: Merz Real Estate GmbH & Co. KG, an affiliated company of the Merz Group, reached an agreement with two major
shareholders of Noratis, including its CEO Igor Christian Bugarski. Merz acquired c. 1.1m shares at a price of EUR 21. Following the
completion of the acquisition, Merz Real Estate will initially hold approx. 29.4% of the shares in Noratis AG. In addition, the new shareholder
also committed itself to Noratis AG to invest a total of up to EUR 50m in the company by the end of 2024 via capital measures.
� Conclusion: We view the entry of the major shareholder as very positive for the future growth of Noratis. The long-term goal of making the
overall revenues less dependent on property sales and strengthening the recurring revenues from rental income can now be accelerated
significantly. To reflect these events, we have revised our model and adjusted our assumptions.
The eventful start to the year underpins our positive view. We stick to our Buy recommendation and raise our PT.
in EUR m H2/19 H2/19e H2/18 yoy 2019 2019e 2018 yoy
Sales 28.2 26.5 35.3 -20.2% 75.9 74.2 56.1 35.2%0.0
EBIT 7.0 7.7 10.8 -35.7% 15.8 15.4 15.6 1.0%
margin 24.7% 29.1% 30.7% 20.8% 20.7% 27.9%0.0
EBT 5.2 6.1 9.3 -43.8% 12.1 11.8 12.8 -5.3%
margin 18.5% 23.1% 26.2% 15.9% 16.0% 22.8%
Net income 3.7 4.6 6.7 -44.3% 8.7 8.4 9.3 -6.9%
Changes in Estimates: Comment on Changes:
FY End: 31.12. in EUR m
2020e (old)
+ / - 2021e (old)
+ / - 2022e (old)
+ / -
Sales 101.5 -72.8 % 106.8 -57.9 % n.a. n.m.
EBIT 16.7 -58.9 % 17.6 -42.0 % n.a. n.m.
EBT 12.1 -83.1 % 12.7 -68.9 % n.a. n.m.
EPS 2.39 -84.9 % 2.50 -74.4 % n.a. n.m.
DPS 1.20 -84.9 % 1.25 -74.4 % n.a. n.m.
� As we expect the company to focus heavily on portfolio growth over the next two years based on the new financial opportunities, we have significantly reduced our estimates for property sales
� Due to the combination of strong portfolio growth and a reduction in property sales, we expect an increase in liabilities and thus higher interest expenses
FY End: 31.12. in EUR m
CAGR (19-22e) 2016 2017 2018 2019 2020e 2021e 2022e
Sales 9.5 % 44.6 68.0 56.1 75.9 27.6 45.0 99.5
Change Sales yoy 87.1 % 52.6 % -17.5 % 35.2 % -63.7 % 63.0 % 121.3 %
Property Sales 37.8 61.9 48.2 63.0 12.0 22.8 73.8
Rental income 6.7 6.1 7.9 12.9 15.6 22.2 25.7
Gross profit 13.2 21.5 21.6 21.6 12.8 17.2 27.9
Gross profit margin 29.6 % 31.7 % 38.5 % 28.5 % 46.6 % 38.3 % 28.0 %
EBIT 9.6 % 9.9 15.2 15.5 15.8 6.9 10.2 20.7
Margin 22.2 % 22.4 % 27.7 % 20.8 % 24.9 % 22.7 % 20.8 %
EBT 3.7 % 6.0 12.2 12.8 12.1 2.1 3.9 13.5
Margin 13.5 % 18.0 % 22.8 % 15.9 % 7.4 % 8.8 % 13.5 %
Net income 3.3 % 4.2 8.7 9.2 8.7 1.5 2.8 9.6
EPS -3.3 % n.a. 2.99 2.57 2.41 0.36 0.64 2.18
EPS adj. -3.3 % n.a. 2.99 2.57 2.41 0.36 0.64 2.18
DPS -3.2 % 0.00 1.50 1.29 1.20 0.18 0.32 1.09
Dividend Yield n.a. 8.3 % 5.4 % 5.6 % 0.8 % 1.5 % 5.0 %
EV / Sales n.a. 1.7 x 4.1 x 3.3 x 12.9 x 9.9 x 4.6 x
EV / EBITDA n.a. 7.6 x 14.7 x 15.7 x 51.2 x 42.6 x 21.4 x
EV / EBIT n.a. 7.7 x 14.8 x 15.9 x 52.1 x 43.6 x 22.0 x
P / E n.a. 6.0 x 9.2 x 8.9 x 60.3 x 33.9 x 10.0 x
ROE 63.3 % 29.6 % 18.7 % 16.4 % 2.2 % 4.2 % 0.0 %
Net Debt 64.9 64.4 145.4 172.4 261.7 349.3 360.1 Guidance: n.a.
Rel. Performance vs Scale All
1 month: 4.4 %
6 months: 0.6 %
Year to date: n/a
Trailing 12 months: -6.5 %
Company events: 18.06.20 RS-Call
25.06.20 AGM
30.09.20 Q2
Noratis
NO T E Publ ished 11 .06 .2020 2
RESEARCH
Sales development in EUR m
Source: Warburg Research
Rental income development in EUR m
Source: Warburg Research
EBIT development in EUR m
Source: Warburg Research
Company Background
� Developer of existing residential property portfolios in German second/third tier locations, listed in the Scale Segment of Frankfurt
Stock Exchange
� 80-90% of total revenues are generated from property sales in a small segment (100-800 units) with very stable transaction volumes
in the past
� Focus on renovation and restructuring measures with high value increase potential over a period of two to three years
� Covering the entire value chain from acquisition, asset management, (including the planning of value accretive modernisation) and
disposals by internal employees, who also manage external service providers
Competitive Quality
� Specialized in affordable basic and medium standard residential property development, a niche which is too big for private investors
and too small for larger institutional investors, which leads to lower competition
� Business model can be applied on broader scale to additional locations in Germany
� Project development is mainly carried out by internal employees (e.g. architects, draftsmen, business economists and engineers)
which reduces dependency on third parties and increases flexibility in processes
� In contrast to many smaller competitors Noratis is well capitalized and, as a listed company with a strong majority shareholder, has
better access to capital
� Noratis has a strong purchasing network with excellent access to big real estate holding companies as well as regional brokers,
involving them at very early stage of the portfolio bidding processes
EBT development in EUR m
Source: Warburg Research
Gross margin development in %
Source: Warburg Research
Net income development in EUR m
Source: Warburg Research
Noratis
NO T E Publ ished 11 .06 .2020 3
RESEARCH
Summary of Investment Case 4
Company Overview 5
Competitive Quality 6
Attractive niche player 6
Combining advantages of both peers 6
Affordable housing in B-locations 6
Opportunity for economies of scale within the business model 7
Internal know-how leads to efficient processes 7
Track record and network 7
New Major Shareholder 8
Merz Real Estate GmbH & Co. KG – fresh money for further growth 8
New major shareholder 8
New financial firepower 9
Accelerated portfolio growth leads to short-term decline in earnings 9
Changes in Model Assumptions 10
Acquisitions 10
Property sales 12
Revenues 14
Accelerated Growth 15
Revenue split 15
Portfolio growth 15
Margin development 16
Valuation 17
Fundamental valuation 17
DCF (equity method) valuation 17
Relative valuation 19
NAV calculation supports investment case 19
Company Background 20
History 20
Managing Board 21
Owners 22
Noratis
NO T E Publ ished 11 .06 .2020 4
RESEARCH
Summary of Investment Case
Investment triggers
� Entry of new major shareholder Merz accelerates growth potential
� Realisation of hidden values (at-cost HGB book keeping) by selling developed properties
� Strong focus on portfolio growth in the next two years will generate economies of scale and increase the share of the recurring rental
income which should stabilise the overall revenue stream and reduce dependence on property sales
� Margins expected to increase as the share of high-margin rental business increases and portfolios are sold on a more opportunistic
basis due to lower dependence on property sales, which should at least stabilise the margins on property sales
� As the proportion of revenue generated by recurring rental income increases, the business model will become more like that of a
residential holding company which should justify higher valuation (based on higher multiples)
Valuation
� The DCF approach (equity method) derives a price target of EUR 27.50 per share which implies upside of c. 24.00% based on the
current share price
� There should be significant acceleration towards the medium-term target to generate 60% of revenue from property sales and 40%
from rental income as a result of the financial commitments of the new major shareholder. This should stabilise total revenues in
future based on a higher share of recurring revenues that should reduce the beta (currently 1.4) and strengthen margins
� Targeted revenue split would shift the business model further towards a residential holding company, which is normally valued at
higher multiples and would justify a higher valuation for Noratis
� Constant transaction volume in the small-scale segment (100-800 units) increases predictability and likelihood of further deals
(according to research from BBSR)
Growth
� Approximately 70% of Germany’s residential supply stock falls into Noratis’ potential sourcing pipeline (constructed between the
1920s and 1980s)
� Retained earnings, recent capital increase and the financial commitments from the new major shareholder provide opportunities to
finance further growth
� Average internal firepower of c. EUR 100m per year for acquisitions (2020e – 22e) will boost growth also beyond 2022e
� Focusing particularly on acquisitions in 2020e and 2021e to increase portfolio size significantly in the short term
� Shrinking household size driving demand for living space in Germany
Competitive quality
� By combining the tasks of an operating portfolio holding company and a developer, Noratis occupies an attractive niche. As Noratis
invests in existing properties it does not carry the full risk of a pure property developer and, at the same time, generates higher returns
(based on sales of value developed properties) than pure portfolio holding companies.
� The targeted transaction size (20-1k units) also has a niche character as it is typically too large for private investors and too small for
institutional investors. This reduces competition. This segment is also characterised by a very stable transaction volume which
supports the predictability and likelihood of further deals.
� Project development is mainly carried out by internal employees (e.g. architects, draftsmen, business economists and engineers)
leading to lower costs, faster execution and independence from third parties as well as higher flexibility
� Noratis has a strong purchasing network with excellent access to big real estate holding companies and regional brokers
Noratis
NO T E Publ ished 11 .06 .2020 6
RESEARCH
Competitive Quality
� Attractive niche player combining advantages of a residential holding company and a
developer
� With its focus on second and third-tier locations, there should continue to be ample
acquisition opportunities for Noratis
� Management has extensive expertise, a long track record and a strong network within
the real estate sector
Attractive niche player with an unique business model
Attractive niche player
Noratis is a developer of residential property portfolios and combines the strengths of an
operating portfolio holding company and a developer. As a consequence of occupying
this specific niche, there are no clear peers. The main competitors are therefore
residential holding companies for some parts of its business and real estate developers
for other parts of the business.
Combining advantages of both peers
As Noratis invests in existing properties, it does not bear the full risk of a pure property
developer. Furthermore, rental income covers the operating and financing costs in
almost all acquired portfolios, which stabilises cash flows in the development phase.
Both factors represent a competitive edge over pure real estate developers.
In comparison to pure portfolio holding companies, Noratis is able to generate higher
returns (based on sales of developed properties)
Attractive niche
Source: Noratis, Warburg Research
Affordable housing in B-locations
By focusing on second and third-tier locations or on the periphery of big cities, Noratis
benefits from two market conditions. Many of its competitors concentrate mainly on the
top seven locations. Firstly, there is a supply bottleneck in prime locations due to a lack
of new construction projects, which either makes new acquisitions very expensive or
offers little chance of acquiring new portfolios. Secondly, due to the supply bottleneck,
investors will begin switching from A to B locations, where prices will eventually increase.
Thus Noratis can achieve higher prices on property sales.
Noratis
NO T E Publ ished 11 .06 .2020 7
RESEARCH
Opportunity for economies of scale within the business model
The Noratis business model includes activities such as acquisition, technical
development, asset management as well as property sales, all of which can be easily
extended with economies of scale.
Internal know-how leads to efficient processes
The entire value chain of Noratis is carried out by internal employees (e.g. architects,
draftsmen, business economists and engineers). Internal coordination means that:
� Projects can be prioritized accordingly to give Noratis certain flexibility in its processes
� Internal asset managers can maintain close contract with the local property
management, enabling Noratis to assert its interests in a targeted manner
These are important steps in the development process and these distinguish the
company, especially from large residential holding companies.
Furthermore, as renovation measures tend to be standard and repetitive, internal
employees have developed a certain level of expertise in these areas, resulting in faster
and more efficient processes.
Track record and network
Management and supervisory board members have extensive experience in developing
and selling properties. This results in:
� The creation of a valuable network of approx. 4k contacts with excellent access to big
real estate holding companies as well as regional brokers, allowing them to be involved
at a very early stage in portfolio bidding processes
� Development of expertise in recurring “problems” with preferred portfolios types,
leading to faster due diligence and therefore faster purchasing processing
� Specialization in certain recurring renovation measures in these buildings results in
efficient processes and lower costs
Noratis
NO T E Publ ished 11 .06 .2020 8
RESEARCH
New Major Shareholder
� Merz Real Estate GmbH is part of the Merz Group. Among its key activities are the
globally oriented healthcare segment
� After the acquisition of c. 1.0m shares from existing shareholders, Merz’s stake
increased to 29.4%
� The capital increase should have increased the stake further to 34.0%
� Merz has committed to invest an additional EUR 50m in Noratis over the next five
years
Accelerated portfolio growth expected
Merz Real Estate GmbH & Co. KG – fresh money for further growth
At the end of March, Noratis announced a new major shareholder. Merz Real Estate
GmbH & Co. KG, headquartered in Frankfurt am Main, is part of the Merz Group, which
is family-owned. The key activities of the Merz Group include the globally oriented
Healthcare segment with the businesses Merz Aesthetics, Merz Therapeutics and Merz
Consumer Care with brands such as tetesept and Merz Spezial Dragées. The Merz
Group is active in other areas, including the real estate sector.
Merz Holding GmbH & Co. KG
Source: Merz, Warburg Research
New major shareholder
Merz Real Estate GmbH & Co. KG reached an agreement with two major shareholders
of Noratis, including its CEO Igor Christian Bugarski. In a first step, Merz acquired
1,057,650 shares at a price of EUR 21. Following the completion of the acquisition, Merz
Real Estate will initially hold approximately 29.4% of the shares in Noratis AG. A majority
shareholding is targeted in the medium term. However, Igor Christian Bugarski retains an
8.0% stake in the company.
Noratis
NO T E Publ ished 11 .06 .2020 9
RESEARCH
Additionally a first minor capital increase took place in mid-May. In this context, the
company's share capital increased from EUR 3,601,897, divided into 3,601,897 no-par
bearer shares of common stock (no-par shares), by EUR 252,525 to EUR 3,854,422 by
issuing 252,525 new no-par shares, each with a notional interest in the share capital of
EUR 1 and entitlement to dividends from January 1, 2020. Only Merz Real Estate was
permitted to subscribe and it acquired all new shares. The new shares were issued at a
price of EUR 19.80 per new share. In contrast to the existing shares of the company,
they are not entitled to a share in profits for the past financial year 2019. A takeover offer
from Merz Real Estate is not necessary.
Merz Holding GmbH & Co. KG
Source: Noratis, Warburg Research
New financial firepower
Merz Real Estate has made a commitment to Noratis AG within the framework of an
investor and fixed subscription agreement to invest a total of up to EUR 50m in the
company by the end of the 2024 via capital measures. It is planned to spread these
investments in a similar order of magnitude over time. However, this also depends on the
opportunities arising on the market for portfolio purchases. Thus there will be certain
flexibility in the investments.
The financial commitment by Merz promoted us to revise our model assumptions and
take one additional capital increase for 2020 into account. In our view, this is the only
way to map Noratis’ growth potential in the coming years.
Accelerated portfolio growth leads to short-term decline in earnings
The financial obligations of Merz Real Estate and the proceeds from the capital increase
are to be used exclusively for the further growth of the portfolio. We view the entry of the
major shareholder as very positive for the further growth of Noratis. The long-term goal
of making the overall revenues less dependent on property sales and strengthening the
recurring revenues from rental income can now be accelerated significantly. This will
make it possible to significantly stabilise revenues earlier than planned by generating a
higher proportion of recurring and predictable rental income. However, the sale of
properties optimised by Noratis will remain the most important source of earnings. The
entry of Merz Real Estate and the associated financial resources enable the company to
sell off portfolios more selectively and put Noratis in a better position to take advantage
of market opportunities as they arise. For 2020, as a short-term effect, the company
expects its net income (HGB) to be significantly lower than in previous years as a result
of lower portfolio sales than planned.
50.5% 47.1%
18.5%
7.5%
12.2%
11.4%
34.0%
Q4 2019 H1 2020e
Free float Igor Bugarski (Current CEO)
Hansaco AS (E. Pigoznis) Terratis GmbH (O. Smits)
Merz Real Estate
Noratis
NO T E Publ ished 11 .06 .2020 10
RESEARCH
Changes in Model Assumptions
� Further capital increase is taken into account
� Investment volume limited to the financial commitment of the new major shareholder
� Expected reduction in property sales for the next two years as the company plans to
focus strongly on portfolio expansion
Use of one further capital increase taken into account
Acquisitions
To secure further growth, the acquisition activities are an important step in the Noratis
value chain. Supported by the company’s own specialised software, potential targets
worth EUR 22.7bn with 222,200 units were reviewed in 2019.
Thanks to the financial flexibility gained, the focus this year is particularly on portfolio
growth and thus also on strong acquisition activities. The company has so far made
three acquisitions in Emden, Leipzig/Halle and Rüsselsheim with an estimated total
investment volume of EUR 30.0m.
Acquisitions in 2020
Source: Noratis, Warburg Research
As a result of the entry of the new shareholder and the associated investment, we have
decided to take a future capital increase into account to reflect the growth potential of the
company. As Merz Real Estate has committed to invest a total of up to EUR 50m in the
company by the end of the 2024 via capital measures, we envisage a similar investment
volume spilt over the next five years, resulting in an investment volume of EUR 10m p.a.
Further assumptions can be summarised as follows:
� Share price: EUR 19.95
� Discount 5%
� The resulting cap. raise share price: EUR 18.67
Envisaged future capital increase
Source: Noratis, Warburg Research
The first capital increase shown in the overview above (I) refers to the capital increase
carried out in mid-May and as described on page 9. The 0.253m new no-par shares
were issued at a price of EUR 19.80 per new share.
Location Purchase date Units sqm Ø Rent EUR/sqm Estimated Purchase Price Price
Emden (Herrentor) Feb-20 79 3,777 6.2 1,100 4,154,700
Leipzig Apr-20 32 1,792 6.9 1,900 3,404,800
Halle Apr-20 19 1,064 6.2 1,350 1,436,400
Rüsselsheim May-20 83 8,300 9.3 2,200 18,260,000
213 14,933 27,255,900
ancillary costs EUR 126.3 per sqm 1,885,291
capex EUR 63.2 per sqm 942,646
Total 30,083,837
I II I+II
2019 2020 2020 2020e
New no-par bearer shares 0.3 0.5 0.8
Subscribed capital 3.6 3.9 4.1 4.4
Additional paid-in capital 4.7 9.5 14.2
Gross issue proceeds 5.0 10.0 15.0
Noratis
NO T E Publ ished 11 .06 .2020 11
RESEARCH
Outlook: To estimate the future investment volume for acquisitions, we assume a
maximum expansion of the balance sheet (through leverage) for a given equity ratio for
individual years. Given the expected capital measures, this means that growth in the
coming years will result from the leverage of the net income after dividend payments.
This depends on the absolute net income as well as on the divided policy. We also apply
the following assumptions to derive the investment volume:
� An average purchase price of EUR 1,500 per sqm
� A slight purchase price increase of 1.0% per year
� Average ancillary acquisition costs of 10% of the purchase price
� An average capex of 15% of the purchase price spread over two to three years
� An equity ratio of 17.5%
Based on these assumptions, we expect the following development of the investment
volume over the next years
Development of the total investment volume
Source: Warburg Research
To derive the firepower of the individual years, we leverage the given equity with debt
under the limitation of a book equity ratio of 17.5% (German GAAP). This results in a
theoretical maximum balance sheet total. From this, we deduct capital tied up elsewhere
and derive a theoretical maximum balance sheet item for properties held for sale in
current assets (referred to in the table above as “Max. properties for sales (BS)”). We
deduct from this the properties already held for sale in the balance sheet from the
previous year. In addition we take into account the disposals of properties this year and
derive the maximal firepower.
EUR m 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e
Shareholders equity 57.2 78.0 78.7 80.1 84.9 90.3 95.8 101.4 107.2 113.0 118.9 124.9
+ Net income year -1 8.7 1.5 2.8 9.6 10.8 11.1 11.3 11.5 11.7 11.8 12.0 12.2
- Dividend year -1 2.9 0.7 1.4 4.8 5.4 5.5 5.6 5.7 5.8 5.9 6.0 6.1
+ assumed capital increase 1)
15.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
= Equity 78.0 78.7 80.1 84.9 90.3 95.8 101.4 107.2 113.0 118.9 124.9 131.0
Maximum total assets 445.4 449.6 457.6 484.9 515.9 547.5 579.7 612.5 645.8 679.6 713.9 748.7
- PPE + other 2)
7.1 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0
= Max. Properties for Sales (BS*) 438.4 443.6 451.6 478.9 509.9 541.5 573.7 606.5 639.8 673.6 707.9 742.7
- Properties for sales (BS) 31.12. year -1 238.8 332.0 421.4 438.8 478.9 509.9 541.6 573.7 606.5 639.8 673.6 707.8
+ Disposals of properties year 11.4 19.7 96.2 72.5 93.2 92.6 91.7 90.2 88.0 85.2 81.8 77.5
= Firepower 210.9 131.4 126.4 112.6 124.2 124.3 123.8 123.0 121.3 119.1 116.1 112.4
- Investment volume 100.0 100.0 100.0 99.0 110.1 109.8 108.9 108.1 106.6 104.5 101.8 98.5
- capitalized refurbishment CAPEX 4.5 9.1 13.6 13.6 14.1 14.5 14.9 14.9 14.7 14.5 14.2 13.9
= Firepower left 106.4 22.2 12.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0
Changes in Working Capital 93.1 89.4 17.4 40.1 31.0 31.7 32.1 32.8 33.3 33.8 34.2 34.9
Properties for sales (BS) 31.12. year 332.0 421.4 438.8 478.9 509.9 541.6 573.7 606.5 639.8 673.6 707.8 742.7
1) For calculation please see page 10
2) Capital tied up elsewhere (e.g. Property, Plant & Equipment)
* BS = Balance Sheet
Noratis
NO T E Publ ished 11 .06 .2020 12
RESEARCH
Property sales
Since Noratis is now financially backed by the new major shareholder, the focus,
particular this year, is on accelerated portfolio growth which leads to major changes in
the property sales strategy.
At the beginning of the year, we calculated with 463 units sold in 2020 resulting in
revenues from property sales of EUR 84.6m. Now we expect 2020 and 2021 to be years
of transition, in which the company will focus on portfolio growth and therefore reduce
portfolio sales to a minimum. This is particularly evident in 2020.
In general, our estimates are based on the following assumptions:
� An average holding period of 25 months
� Longer holding period in individual cases
� Average sales rent multiple of 18x
� For retail sales: individual purchase price of units in the specific region
Property sales 2020e
Source: homeday.de, Warburg Research
Privatisations in Zweibrücken, Riedstadt and Erlensee began in 2019 and the majority of
the apartments have already been sold. In 2020, we expect the remainder of the
portfolios to be sold off.
For Ratzeburg/Mölln we assume a minor partial sale in 2020, as the main focus is on
portfolio growth. The retention of large portfolios like Ratzeburg in its investment portfolio
for as long as possible should be in the interest of the company as high stable cash flows
are generated by rental income.
Property sales 2021e
Source: homeday.de, Warburg Research
We expect property sales to increase again in 2021. Even though we expect sales
revenues to double compared to the previous year, they will still be well below the
revenues of 2017 to 2019 (run rate between EUR 40m to 65m).
We therefore still see 2021 as a transitional year as we envisage that portfolio growth will
remain the key focus of the company.
Location Purchase date Units sqm Ø Price EUR/sqm Revenues
Zweibrücken Sep-13 1 100 1,200 120,000
Riedstadt Sep-15 13 1,200 2,500 3,000,000
Erlensee Sep-16 36 2,700 2,300 6,210,000
Location Purchase date Units sqm Ø Rent EUR/sqm Revenues
Total 86 6,089 12,017,308
Retail sale
Block sale Ratzeburg/Mölln I Nov-17 36 2,089 2,687,3087
Location Purchase date Units sqm Ø Rent EUR/sqm Revenues
Frankfurt Jun-19 25 2,030 15 9,195,900
Krefeld Nov-19 48 3,100 7 4,687,200
Kassel Mar-19 36 2,400 8 3,991,680
Neu-Isenburg I Apr-19 35 3,000 8 4,924,800
Total 144 10,530 22,799,580
Block sale
Noratis
NO T E Publ ished 11 .06 .2020 13
RESEARCH
Property sales 2022e
Source: homeday.de, Warburg Research
In 2022e, we expect property sales to be slightly higher than the 2019 level again and
therefore back on track. We also envisage that at least one larger portfolio with cash
flows similar to Ratzeburg in size and stability will have been acquired by then. We
therefore assume that 2022, among other sales, this portfolio will be sold in order to
realise the hidden reserves.
Property sales 2023e
Source: homeday.de, Warburg Research
In addition to the sales listed in the table above, we expect the company to sell a minor
part (only 4%) of the purchases made in 2020. To estimate the income from these sales,
we apply the following assumptions:
� Average rent per sqm of EUR 6.5
� An average rent multiple of 18x
� Rent increase of 6.5% p.a. from 2018 onwards (thereof 1.0% p.a. general rent increase
and 5.5% rent increase based on vacancy reduction and improvement measures)
From 2024 onwards, the company will continue to focus on steady growth as well as on
strengthening the share of the recurring rental income from the overall revenues.
Although the sale of value enhanced properties will remain the most important source of
income, the company intends to shift the revenue split towards its mid-term target split of
60% property sales and 40% rental income
The company is pursuing the actively managed sale of acquired portfolios, with portfolios
generally sold after a holding period of 2-3 years. However, in order to gradually increase
the share of rental income over time, more acquisitions than sales are targeted. This also
aims to secure more steady growth of total revenues as the size of the portfolio
increases.
Location Purchase date Units sqm Ø Rent EUR/sqm Revenues
Ratzeburg/Mölln II Nov-17 319 18,511 7 22,324,249
Celle/Königslutter Jun-18 345 24,200 6 31,595,520
Neu-Isenburg Sep-19 150 8,600 11 19,876,320
Total 814 51,311 73,796,089
Block sale
Location Purchase date Units sqm Ø Price EUR/sqm Revenues
Retail sale Frankfurt Ginnheim I Sep-18 100 6,667 4,700 31,333,333
Location Purchase date Units sqm Ø Rent EUR/sqm Revenues
Rügen Mar-17 142 8,900 7 12,976,200
Ratingen Dec-18 156 11,000 9 21,146,400
Freital near Dresden Nov-18 93 8,900 6 11,534,400
Frankfurt (Höchst) Sep-19 18 770 11 1,879,416
47.02 3,056 8 4,372,635
Total 556 39,293 83,242,384
Block sale
Additional property sales
Noratis
NO T E Publ ished 11 .06 .2020 14
RESEARCH
Revenues
As Noratis revenues can be divided into property sales (i.e. received after finishing the
development project) and rental income (i.e. received during the development process),
major changes, particularly in property sales, are envisaged for 2020 and 2021 as
depicted above. Overall, we now expect the total revenues and the revenue split to
develop as follows:
Revenue share of property sales and rental income (in EUR m)
Source: Noratis, Warburg Research
The shift in the income split in 2023 back to levels prior to the entry of the new major
shareholder has two major reasons:
� We expect that the property sales to increase further in 2023
� We also expect that this year, in relative terms, more properties will be sold than
bought, which will reduce rental income
With further capital increases beyond 2020e, continuous rental growth would be
possible. The opportunity is not taken into account.
Revenues (in EUR m)
Source: Noratis, Warburg Research
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e
Total revenues 23.8 44.6 68.0 56.1 75.9 27.6 45.0 99.5 103.3 105.4 107.3 109.2 111.0 112.7 114.4 116.1 117.6
Total property sales 19.0 37.8 61.9 48.2 63.0 12.0 22.8 73.8 82.9 82.7 81.3 79.7 77.6 75.0 71.9 68.4 64.1
Total rental income 4.8 6.7 6.1 7.9 12.9 15.6 22.2 25.7 20.4 22.8 26.0 29.5 33.4 37.7 42.5 47.7 53.5
% of property sales 80% 85% 91% 86% 83% 44% 51% 74% 80% 78% 76% 73% 70% 67% 63% 59% 54%
% of rental income 20% 15% 9% 14% 17% 56% 49% 26% 20% 22% 24% 27% 30% 33% 37% 41% 46%
61.9
48.2
63.0
12.022.8
73.8
6.1
7.9
12.9
15.6
22.2
25.7
68.0
56.1
75.9
27.6
45.0
99.5
00
10
20
30
40
50
60
70
80
90
100
2017 2018 2019 2020e 2021e 2022e
Total property sales Total rental income
Noratis
NO T E Publ ished 11 .06 .2020 15
RESEARCH
Accelerated Growth
Revenue split
As already mentioned, the entry of the new major shareholder should accelerate the
increase in the share of recurring rental income. To this end, we have compared our last
estimates before the entry with the new estimates after the entry.
As shown below, the entry of the new major shareholder results in the earlier
achievement of a higher proportion of rental income. Should the company be able to
increase the equity base in 2021e by making further or larger capital measures than
envisaged, even faster development would be possible. As shown below, the split
reaches 75% property sales and 25% rental income as early as in 2020e before shifting
towards property sales in 2023e, for the reasons discussed above under the heading
“Revenues” on page 14.
The lower top line than in our previous estimates is explained by the lower dependency
on portfolio sales for further growth and the higher rental income (which should
significantly stabilise total revenues). The company should therefore be able to take a
more opportunistic approach to availing of market opportunities, which in turn should
have a positive impact on the property sales margin.
Expected development of revenue split
Source: Warburg Research
Portfolio growth
Portfolio growth should also accelerate significantly as a result of the entry. The new
major shareholder will enable Noratis to focus particularly on acquisitions in 2020e and
even in 2021e and to reduce portfolio sales to a minimum, especially in 2020e.
As a result, the portfolio should grow much faster than previously assumed, as depicted
below.
Expected development of portfolio
Source: Warburg Research
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
Total revenues 23.8 44.6 68.0 56.1 75.9 101.5 106.8 114.3 121.1 128.2 135.5 142.5 149.1 154.3 157.0 158.5
% of property sales 80% 85% 91% 86% 83% 83% 84% 86% 85% 83% 81% 80% 78% 75% 72% 68%
% of rental income 20% 15% 9% 14% 17% 17% 16% 14% 15% 17% 19% 20% 22% 25% 28% 32%
Latest estimates of revenue split before the new major shareholder
Actual estimates of revenue split considering the investments of the new major shareholder
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
Total revenues 23.8 44.6 68.0 56.1 75.9 27.6 45.0 99.5 103.3 105.4 107.3 109.2 111.0 112.7 114.4 116.1
% of property sales 80% 85% 91% 86% 83% 44% 51% 74% 80% 78% 76% 73% 70% 67% 63% 59%
% of rental income 20% 15% 9% 14% 17% 56% 49% 26% 20% 22% 24% 27% 30% 33% 37% 41%
2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
Portfolio size (in units) 2,407 3,244 4,015 4,256 5,106 5,333 5,560 5,784 6,011 6,239 6,469 6,700
2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
Portfolio size (in units) 2,407 2,895 3,384 3,739 4,074 4,337 4,606 4,888 5,172 5,480 5,775 6,075
Expected portfolio development before the new major shareholder
Expected portfolio development now
Noratis
NO T E Publ ished 11 .06 .2020 16
RESEARCH
Margin development
The accelerated shift of the revenue split towards a higher share of rental income as
shown above also has a positive effect on the EBT margin as:
� The rental business itself is higher-margin
� Due to the lower dependence on property sales, portfolio sales can be carried out on a
more opportunistic basis, which has a positive effect on the sales margin
Expected development EBT margin
Source: Warburg Research
EBT margin development before the new major shareholder
EBT margin development now
2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
EBT Margin 18.0% 22.8% 15.9% 7.4% 8.8% 13.5% 11.4% 12.0% 12.6% 13.3% 14.1% 15.0% 16.0% 17.2%
2017 2018 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
EBT Margin 18.0% 22.8% 15.9% 11.9% 11.9% 10.5% 10.7% 11.2% 11.4% 12.0% 12.6% 13.3% 14.1% 15.0%
Noratis
NO T E Publ ished 11 .06 .2020 17
RESEARCH
Valuation
� The DCF approach (equity method) derives a price target of EUR 27 per share and
applies a WACC of 9.09% (equals cost of equity)
� As the company approaches its medium-term revenue split (60% property sales and
40% rental income), this should increase the comparability with pure property holding
companies which are normally valued at higher multiples, justifying a higher valuation
for Noratis
� NAV calculation underpins upside potential
Fundamental valuation
For fundamental valuation purposes, we use our DCF model on an equity basis. For this
reason, our calculation is based on the EBT margin rather than the EBIT margin. We
assume a maximum expansion of the balance sheet (through leverage) for a given
equity ratio for the individual years. We envisage that further growth in the coming years
will result from the leverage of net income (after dividend payments) as well as the
capital increase financed by the investment commitment of the new major shareholder.
We also assume that the entire firepower will be fully invested from 2023e onwards.
According the target debt ratio, it is assumed that 82.5% of the new investments
(increase in working capital) are covered by new debt.
The discount factor is the cost of equity.
DCF (equity method) valuation
Our DCF model (equity method) assumptions can be summarised as follows:
� Sales in 2020e to decline as focus turns to portfolio expansion and reduction of
property sales to a minimum
� Further increase in sales growth until 2023e due to strong internal firepower for
acquisitions as well as sales of properties from the existing portfolio until 2022e
� Growth rate as of 2024e is set at 2.1% (decreasing gradually from year to year to 1.5%
for terminal value) as the revenue split continues to shift and the share of recurring
rental income increases
� Decline in EBT margin in 2023e due to envisaged low net income in 2020 resulting in
minor leverage on equity in 2021e which limits the expansion of the balance sheet
Revenue share of property sales and rental income (in EUR m)
Source: Warburg Research
2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e
Total revenues 27.6 45.0 99.5 103.3 105.4 107.3 109.2 111.0 112.7 114.4 116.1 117.6
Total property sales 12.0 22.8 73.8 82.9 82.7 81.3 79.7 77.6 75.0 71.9 68.4 64.1
Total rental income 15.6 22.2 25.7 20.4 22.8 26.0 29.5 33.4 37.7 42.5 47.7 53.5
EBIT margin Property Sales 10% 10% 11% 13% 13% 13% 13% 13% 13% 13% 13% 13%
EBIT Property sales 1.2 2.3 8.1 10.8 10.7 10.6 10.4 10.1 9.7 9.3 8.9 8.3
EBIT margin Rental Income 36% 36% 49% 52% 53% 53% 53% 53% 53% 53% 53% 53%
EBIT Rental income 5.7 7.9 12.7 10.6 12.1 13.8 15.6 17.7 20.0 22.5 25.3 28.4
Total EBIT 6.9 10.2 20.7 21.4 22.8 24.3 26.0 27.8 29.7 31.9 34.2 36.7
Total EBIT margin 24.9% 22.7% 20.8% 20.7% 21.6% 22.7% 23.8% 25.0% 26.4% 27.8% 29.4% 31.2%
Interest expenses 4.9 6.4 7.3 9.6 10.2 10.8 11.5 12.2 12.9 13.5 14.2 15.0
% of total revenues 17.7% 14.3% 7.3% 9.3% 9.7% 10.1% 10.5% 11.0% 11.4% 11.8% 12.3% 12.7%
Total EBT margin 7.4% 8.8% 13.5% 11.4% 12.0% 12.6% 13.3% 14.1% 15.0% 16.0% 17.2% 18.5%
Noratis
NO T E Publ ished 11 .06 .2020 18
RESEARCH
� From 2023e onwards, a slight increase in the EBT margin is forecast again as a result
of the increasing shift towards higher-margin rental income
� A beta of 1.4 is based on the continued high level of dependency on property sales and
the associated uncertainty. A shift in the revenue split towards a higher share of rental
income would reduce the uncertainty, lower the beta and thus increase the value.
� A WACC of 9.09% which is equal to the cost of equity
Our DCF analysis (equity method) yields a fair value of EUR 27 per share.
DCF model
Detailed forecast period Transitional period Term. Value
Figures in EUR m 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e
Sales 27.6 45.0 99.5 103.3 105.4 107.3 109.2 111.0 112.7 114.4 116.1 117.6 119.4
Sales change -63.7 % 63.0 % 121.3 % 3.8 % 2.1 % 1.8 % 1.8 % 1.7 % 1.5 % 1.5 % 1.5 % 1.4 % 1.5 % 1.5 %
EBIT 2.1 3.9 13.5 11.8 12.6 13.5 14.5 15.6 16.9 18.3 19.9 21.7 22.3
EBIT-margin 7.4 % 8.8 % 13.5 % 11.4 % 12.0 % 12.6 % 13.3 % 14.1 % 15.0 % 16.0 % 17.2 % 18.5 % 18.6 %
Tax rate (EBT) 29.1 % 29.1 % 29.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 %
NOPAT 1.5 2.8 9.6 8.2 8.8 9.4 10.1 10.9 11.8 12.8 14.0 15.2 15.6
Depreciation 0.1 0.2 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.1 0.1 0.1 0.1
in % of Sales 0.4 % 0.5 % 0.5 % 0.4 % 0.4 % 0.3 % 0.3 % 0.3 % 0.2 % 0.1 % 0.1 % 0.1 % 0.1 %
Changes in provisions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Change in Liquidity from
- Working Capital 93.1 89.4 17.4 40.1 31.0 31.7 32.1 32.8 33.3 33.8 34.2 34.9 -32.2
- Capex 0.2 0.2 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Capex in % of Sales 0.6 % 0.5 % 0.3 % 0.2 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Other -103.7 -73.7 -14.4 -22.3 -25.5 -26.2 -26.5 -27.0 -27.5 -27.9 -28.2 -28.8 26.6
Free Cash Flow (WACC Model)
12.0 -12.8 6.7 -9.4 3.7 4.1 4.7 5.4 6.1 6.9 8.0 9.1 21.2 19
PV of FCF 11.5 -11.3 5.4 -6.9 2.5 2.5 2.7 2.8 2.9 3.0 3.2 3.4 7.2 84 share of PVs 5.00 % 20.71 % 74.29 %
Model parameter Valuation (m)
Derivation of WACC: Derivation of Beta: Present values 2032e 29
Terminal Value 84
Debt ratio 0.00 % Financial Strength 1.20 Financial liabilities 86
Cost of debt (after tax) 1.7 % Liquidity (share) 2.00 Pension liabilities 0
Market return 7.00 % Cyclicality 1.30 Hybrid capital 0
Risk free rate 1.50 % Transparency 1.20 Minority interest 0
Others 1.20 Market val. of investments 0
Liquidity 9 No. of shares (m) 4.4
WACC 9.09 % Beta 1.38 Equity Value 121 Value per share (EUR) 27.52
Sensitivity Value per Share (EUR)
Terminal Growth Delta EBIT-margin
Beta WACC 0.75 % 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp
1.56 10.1 % 21.78 22.16 22.56 22.99 23.44 23.91 24.42 1.56 10.1 % 20.35 21.23 22.11 22.99 23.86 24.74 25.62
1.47 9.6 % 23.66 24.11 24.59 25.09 25.63 26.20 26.82 1.47 9.6 % 22.29 23.22 24.16 25.09 26.03 26.96 27.90
1.43 9.3 % 24.70 25.19 25.71 26.26 26.85 27.48 28.16 1.43 9.3 % 23.37 24.33 25.30 26.26 27.23 28.20 29.16
1.38 9.1 % 25.81 26.35 26.92 27.52 28.17 28.86 29.61 1.38 9.1 % 24.52 25.52 26.52 27.52 28.52 29.52 30.52
1.33 8.8 % 27.00 27.59 28.21 28.88 29.59 30.36 31.18 1.33 8.8 % 25.77 26.81 27.84 28.88 29.91 30.95 31.98
1.29 8.6 % 28.28 28.92 29.61 30.34 31.13 31.98 32.89 1.29 8.6 % 27.12 28.20 29.27 30.34 31.42 32.49 33.56
1.20 8.1 % 31.14 31.91 32.75 33.65 34.62 35.67 36.81 1.20 8.1 % 30.17 31.33 32.49 33.65 34.81 35.97 37.13
� DCF equity method
� Decline in EBT margin in 2023e due to declining rents as a result of a relatively higher volume of disposals in 2023
� The position "working capital" includes properties held for sale as current assets
� "Others" contains the part of the WC that is financed by debt and must therefore be deducted from the WC build-up
� From 2023e onwards a slight increase in the margin again as a result of the shift towards higher-margin rental income
Noratis
NO T E Publ ished 11 .06 .2020 19
RESEARCH
Relative valuation
NAV calculation supports investment case
With an average holding period of two to three years, Noratis’ existing portfolio is
intended for sales in a relatively short period of time. As a result, NAV is not a relevant
method to value Noratis.
However, firstly based on the expected shift in the revenue split towards recurring rental
income, a higher percentage of acquired properties will remain in the company’s portfolio
for longer than two to three years. Secondly, despite the relatively short holding period, it
does reflect the premium/discount that is being paid by the market compared to its NAV.
Assuming a conservative gross margin between 15% to 20% (for historical development,
please see page 24), we envisage a fair value of the trading portfolio between EUR
371.9m and EUR 388.0m. Based on these assumptions, the share is currently trading at
a discount of 34% to 52% to NAV.
Revenues (in EUR m)
Source: Noratis, Warburg Research
That said one should bear in mind that Noratis will predominantly focus on portfolio
expansion in 2020e and 2021e thus we calculate with strong acquisition activities on the
one hand and with minor property sales on the other hand, resulting in extraordinarily
strong growth in book value of properties for sales in these years compared to the
previous years.
Nevertheless we regard Noratis as an attractive investment.
EUR m (2020e figures) 20% gross margin 15% gross margin
Book value of properties for sale 332.0 332.0
+ Potential margin on portfolio 66.4 49.8
= Estimated fair value of properties for sale 398.4 381.8
+ Tangible fixed assets 0.5 0.5
+ Other assets 0.0 0.0
= Gross asset value 398.9 382.3
- Net debt 261.7 261.7
- Minorities 0.0 0.0
= NAV 137.2 120.6
/ # of shares 4.4 4.4
= NAV/share 31.2 27.5
Current share price 22.2 22.2
Discount 41% 24%
Noratis
NO T E Publ ished 11 .06 .2020 20
RESEARCH
Company Background
Business model overview
Sources: Noratis, Warburg Research
History
2002: Noratis GmbH is founded by Oliver C. Smits, major shareholder
2011: New shareholder Igor Christian Burgarski
2012: Igor Christian Burgarski joins management board
2016: André Speth becomes CFO
06/2017: IPO with issuance of 0.92 m shares (EUR 18.75 per share)
05/2018: Placement of 681.897 shares, gross proceeds of EUR 15.3m (EUR 22.50 per
share)
10/2018: Dr. Florian Stetter proposed to replace Oliver C. Smits, who keeps his shares in
the company, as chairman of the supervisory board.
03/2020: Merz Real Estate GmbH entered as new major shareholder
Entity structure update
Sources: Noratis, Warburg Research
Noratis AGHolding company directly owns properties
(several projects) and provides servicesto subsidiaries (project companies)
Noratis Wohnen GmbH
• Project in Neu-Isenburg
• Merged with 2. HeBa Immobilien UG
and Noratis Residential GmbH
Noratis Living GmbH
• Currently no projects
• Sales completed
Noratis Habitat GmbH
• Project in Frankfurt
100%
94%
100%
Noratis West GmbH
• to acquire smaller regional portfolios
65%
Noratis
NO T E Publ ished 11 .06 .2020 21
RESEARCH
Managing Board
Igor Christian Bugarski (CEO), civil engineer, joined Noratis in 2011 and became
member of the management board in 2012. Before the entry of the new main
shareholder, he was the largest shareholder and responsible for acquisition,
development, sales and legal. He gained experience in real estate / corporate
development at CBRE and Strabag.
André Speth (CFO), holds a masters degree in business administration, joined Noratis
in 2015 and became CFO in 2016. He is responsible for financing, controlling, investor
relations and IT. He gained experience in real estate investment banking at Morgan
Stanley and Deutsche Bank.
Supervisory Board
Dr. Florian Stetter replaced the retired founder Oliver C. Smits as the Chairman of the
Supervisory Board at the end of October 2018.
He is also chairman of managing board of Rockhedge Asset Management AG as well as
a supervisory board member of Deutsche Wohnen. Furthermore, he is managing partner
in ENOVO s.r.o., Bratislava. He was previously the managing director of Strabag
Property and Facility Services GmbH. He studied business administration at the Vienna
University of Economics and Business where he was conferred with a PhD.
Hendrik von Paepcke is the Vice Chairman of the supervisory board and also
managing director and co-founder of APOprojekt GmbH. He gained many years of
experience at Deutsche Telekom Immobilien und Service GmbH (Head of Marketing of
Sales). He studied Business Administration at the University of Hamburg
Christof Scholl has been a Member of the Supervisory board since the end of
October 2018. He is Partner at NAI apollo and advices national and international
investors regarding investments in Germany. Before that, he was with Dr. Lübke (Head
of Research & Consulting) and Deutsche Bank (private and commercial real estate
financing). He studied Real Estate and Economics at the European Business School
Noratis
NO T E Publ ished 11 .06 .2020 22
RESEARCH
Owners
There are three main shareholders (FY 2019), who own 1.78m of the total 3.60m
outstanding shares:
� Igor Christian Bugarski (CEO) with 18.5%
� Hansa Consulting (Edgars Pigoznis, Latvia) with 18.8%
� Terratis GmbH (Oliver C. Smits and his wife) with 12.2%
During the IPO in June 2017, an additional 0.92m free float shares were issued. In the
course of the IPO, Terratis GmbH and Hansa Consulting sold 5k shares each. During the
capital increase in May 2018, 0.68m shares were issued which increased the free float to
45.5 %.
As Merz Real Estate successfully reached an agreement with two major shareholders,
we expect its stake to increase from 0.0% to 29.4%. Following the completion of the
acquisition, Igor Christian Bugarskis’s stake will remain 8.0% and it is expected that
Hansa Consulting reduced its position to 0.0%.
Including the announced capital increase, Merz Real Estate should increase from 29.4%
to 34.0%. The envisaged development of the shareholder structure is depicted below:
Shareholder structure
Sources: Noratis, Warburg Research
)
50.5% 50.4% 47.1%
18.5%8.0%
7.5%
18.8%
12.2%
12.2%11.4%
29.4% 34.0%
Q4 2019 Q1 2020 Q2 2020e
Free float Igor Bugarski (Current CEO)
Hansaco AS (E. Pigoznis) Terratis GmbH (O. Smits)
Merz Real Estate
Noratis
NO T E Publ ished 11 .06 .2020 23
RESEARCH
DCF model
Detailed forecast period Transitional period Term. Value
Figures in EUR m 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e
Sales 27.6 45.0 99.5 103.3 105.4 107.3 109.2 111.0 112.7 114.4 116.1 117.6 119.4
Sales change -63.7 % 63.0 % 121.3 % 3.8 % 2.1 % 1.8 % 1.8 % 1.7 % 1.5 % 1.5 % 1.5 % 1.4 % 1.5 % 1.5 %
EBIT 2.1 3.9 13.5 11.8 12.6 13.5 14.5 15.6 16.9 18.3 19.9 21.7 22.3
EBIT-margin 7.4 % 8.8 % 13.5 % 11.4 % 12.0 % 12.6 % 13.3 % 14.1 % 15.0 % 16.0 % 17.2 % 18.5 % 18.6 %
Tax rate (EBT) 29.1 % 29.1 % 29.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 %
NOPAT 1.5 2.8 9.6 8.2 8.8 9.4 10.1 10.9 11.8 12.8 14.0 15.2 15.6
Depreciation 0.1 0.2 0.5 0.4 0.4 0.3 0.3 0.3 0.2 0.1 0.1 0.1 0.1
in % of Sales 0.4 % 0.5 % 0.5 % 0.4 % 0.4 % 0.3 % 0.3 % 0.3 % 0.2 % 0.1 % 0.1 % 0.1 % 0.1 %
Changes in provisions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Change in Liquidity from
- Working Capital 93.1 89.4 17.4 40.1 31.0 31.7 32.1 32.8 33.3 33.8 34.2 34.9 -32.2
- Capex 0.2 0.2 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Capex in % of Sales 0.6 % 0.5 % 0.3 % 0.2 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Other -103.7 -73.7 -14.4 -22.3 -25.5 -26.2 -26.5 -27.0 -27.5 -27.9 -28.2 -28.8 26.6
Free Cash Flow (WACC Model)
12.0 -12.8 6.7 -9.4 3.7 4.1 4.7 5.4 6.1 6.9 8.0 9.1 21.2 19
PV of FCF 11.5 -11.3 5.4 -6.9 2.5 2.5 2.7 2.8 2.9 3.0 3.2 3.4 7.2 84 share of PVs 5.00 % 20.71 % 74.29 %
Model parameter Valuation (m)
Derivation of WACC: Derivation of Beta: Present values 2032e 29
Terminal Value 84
Debt ratio 0.00 % Financial Strength 1.20 Financial liabilities 86
Cost of debt (after tax) 1.7 % Liquidity (share) 2.00 Pension liabilities 0
Market return 7.00 % Cyclicality 1.30 Hybrid capital 0
Risk free rate 1.50 % Transparency 1.20 Minority interest 0
Others 1.20 Market val. of investments 0
Liquidity 9 No. of shares (m) 4.4
WACC 9.09 % Beta 1.38 Equity Value 121 Value per share (EUR) 27.52
Sensitivity Value per Share (EUR)
Terminal Growth Delta EBIT-margin
Beta WACC 0.75 % 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp
1.56 10.1 % 21.78 22.16 22.56 22.99 23.44 23.91 24.42 1.56 10.1 % 20.35 21.23 22.11 22.99 23.86 24.74 25.62
1.47 9.6 % 23.66 24.11 24.59 25.09 25.63 26.20 26.82 1.47 9.6 % 22.29 23.22 24.16 25.09 26.03 26.96 27.90
1.43 9.3 % 24.70 25.19 25.71 26.26 26.85 27.48 28.16 1.43 9.3 % 23.37 24.33 25.30 26.26 27.23 28.20 29.16
1.38 9.1 % 25.81 26.35 26.92 27.52 28.17 28.86 29.61 1.38 9.1 % 24.52 25.52 26.52 27.52 28.52 29.52 30.52
1.33 8.8 % 27.00 27.59 28.21 28.88 29.59 30.36 31.18 1.33 8.8 % 25.77 26.81 27.84 28.88 29.91 30.95 31.98
1.29 8.6 % 28.28 28.92 29.61 30.34 31.13 31.98 32.89 1.29 8.6 % 27.12 28.20 29.27 30.34 31.42 32.49 33.56
1.20 8.1 % 31.14 31.91 32.75 33.65 34.62 35.67 36.81 1.20 8.1 % 30.17 31.33 32.49 33.65 34.81 35.97 37.13
� DCF equity method
� Decline in EBT margin in 2023e due to declining rents as a result of a relatively higher volume of disposals in 2023
� The position "working capital" includes properties held for sale as current assets
� "Others" contains the part of the WC that is financed by debt and must therefore be deducted from the WC build-up
� From 2023e onwards a slight increase in the margin again as a result of the shift towards higher-margin rental income
Noratis
NO T E Publ ished 11 .06 .2020 24
RESEARCH
Valuation
2016 2017 2018 2019 2020e 2021e 2022e Price / Book n.a. 1.8 x 1.7 x 1.5 x 1.4 x 1.4 x 1.3 x
Book value per share ex intangibles 6.63 9.99 13.66 14.76 15.09 15.12 16.99
EV / Sales n.a. 1.7 x 4.1 x 3.3 x 12.9 x 9.9 x 4.6 x
EV / EBITDA n.a. 7.6 x 14.7 x 15.7 x 51.2 x 42.6 x 21.4 x
EV / EBIT n.a. 7.7 x 14.8 x 15.9 x 52.1 x 43.6 x 22.0 x
EV / EBIT adj.* n.a. 7.7 x 14.8 x 15.9 x 52.1 x 43.6 x 22.0 x
P / FCF n.a. 4.2 x n.a. n.a. n.a. n.a. n.a.
P / E n.a. 6.0 x 9.2 x 8.9 x 60.3 x 33.9 x 10.0 x
P / E adj.* n.a. 6.0 x 9.2 x 8.9 x 60.3 x 33.9 x 10.0 x
Dividend Yield n.a. 8.3 % 5.4 % 5.6 % 0.8 % 1.5 % 5.0 %
FCF Potential Yield (on market EV) n.a. 10.0 % 5.3 % 5.0 % 1.8 % 2.1 % 3.8 %
*Adjustments made for: -
Company Specific Items
2016 2017 2018 2019 2020e 2021e 2022e
Property Sales 37.8 61.9 48.2 63.0 12.0 22.8 73.8 Rental income 6.7 6.1 7.9 12.9 15.6 22.2 25.7 Gross profit 13.2 21.5 21.6 21.6 12.8 17.2 27.9 Payout Ratio n.a. 50.2 % 50.0 % 49.8 % 50.0 % 50.0 % 0.0 % Properties for Sale 80.2 99.2 176.7 238.8 332.0 421.4 438.8 Total equity 6.6 29.3 49.5 53.4 66.5 66.6 74.9 ROE 63.3 % 29.6 % 18.7 % 16.4 % 2.2 % 4.2 % 0.0 % Property sales margin 24.5 % 28.6 % 35.9 % 22.9 % 35.0 % 22.0 % 19.0 % Rental income margin 57.6 % 62.9 % 54.4 % 55.8 % 55.5 % 55.0 % 54.0 %
Noratis
NO T E Publ ished 11 .06 .2020 25
RESEARCH
Consolidated profit & loss In EUR m 2016 2017 2018 2019 2020e 2021e 2022e
Sales 44.6 68.0 56.1 75.9 27.6 45.0 99.5
Change Sales yoy 87.1 % 52.6 % -17.5 % 35.2 % -63.7 % 63.0 % 121.3 % Property Sales 37.8 61.9 48.2 63.0 12.0 22.8 73.8
Property sales margin 24.5 % 28.6 % 35.9 % 22.9 % 35.0 % 22.0 % 19.0 %
Rental income 6.7 6.1 7.9 12.9 15.6 22.2 25.7
Rental income margin 57.6 % 62.9 % 54.4 % 55.8 % 55.5 % 55.0 % 54.0 %
Gross profit 13.2 21.5 21.6 21.6 12.8 17.2 27.9
Gross profit margin 29.6 % 31.7 % 38.5 % 28.5 % 46.6 % 38.3 % 28.0 % Personnel expenses 2.2 2.4 3.5 4.1 4.4 5.0 5.2
Other operating income 0.2 0.2 0.7 1.0 1.2 1.3 1.5
Other operating expenses 1.3 4.0 3.1 2.6 2.7 3.1 3.0
EBIT 9.9 15.2 15.5 15.8 6.9 10.2 20.7
Margin 22.2 % 22.4 % 27.7 % 20.8 % 24.9 % 22.7 % 20.8 %
Interest income 0.0 0.2 0.2 0.2 0.1 0.2 0.4
Interest expenses 3.9 3.1 3.0 3.8 4.9 6.4 7.7
EBT 6.0 12.2 12.8 12.1 2.1 3.9 13.5
Margin 13.5 % 18.0 % 22.8 % 15.9 % 7.4 % 8.8 % 13.5 % Total taxes 1.8 3.6 3.5 3.4 0.6 1.1 3.9
Net income before minorities 4.2 8.7 9.3 8.7 1.5 2.8 9.6
Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income 4.2 8.7 9.2 8.7 1.5 2.8 9.6
Margin 9.4 % 12.7 % 16.5 % 11.4 % 5.3 % 6.2 % 9.6 % Number of shares, current n.a. 2.9 4.0 4.0 4.0 4.0 0.0
EPS n.a. 2.99 2.57 2.41 0.36 0.64 2.18
*Adjustments made for:
Guidance: n.a.
Financial Ratios 2016 2017 2018 2019 2020e 2021e 2022e
Tax rate (EBT) 30.1 % 29.1 % 27.4 % 28.3 % 29.1 % 29.1 % 29.0 %
DPS 0.00 1.50 1.29 1.20 0.18 0.32 1.09
Dividend Yield n.a. 8.3 % 5.4 % 5.6 % 0.8 % 1.5 % 5.0 %
Payout Ratio n.a. 50.2 % 50.0 % 49.8 % 50.0 % 50.0 % 0.0 %
Sales, EBITDA in EUR m
Source: Warburg Research
Operating Performance in %
Source: Warburg Research
Performance per Share
Source: Warburg Research
Noratis
NO T E Publ ished 11 .06 .2020 26
RESEARCH
Consolidated balance sheet In EUR m 2016 2017 2018 2019 2020e 2021e 2022e Assets Property, plant and equipment 0.1 0.4 0.5 0.4 0.5 0.6 0.7
Inventories 80.2 99.2 176.7 238.8 332.0 421.4 438.8
Accounts receivable 0.1 1.7 24.1 8.2 1.3 2.1 4.6
Liquid assets 5.8 21.8 9.7 8.6 23.0 9.2 12.7
Other short-term assets 1.3 4.7 3.2 2.8 3.6 1.6 1.6
Total Assets 87.5 127.8 214.1 258.9 360.4 434.9 458.5 Liabilities and shareholders' equity Subscribed capital 0.5 2.9 3.6 3.6 4.4 4.4 4.4
Capital reserve 2.0 16.8 31.5 31.5 45.2 45.2 45.2
Retained earnings 4.1 9.3 14.1 18.1 16.7 16.8 25.0
Shareholders' equity 6.6 29.0 49.2 53.2 66.3 66.4 74.6
Minority interest 0.0 0.2 0.2 0.2 0.2 0.2 0.2
Total equity 6.6 29.3 49.5 53.4 66.5 66.6 74.9
Provisions 3.4 7.3 5.4 5.0 5.5 5.9 5.9
Financial liabilities (total) 70.6 86.2 155.0 181.0 284.7 358.5 372.9
thereof short-term financial liabilities 18.0 1.6 20.4 4.5 4.9 4.9 4.9
Accounts payable 0.5 0.8 1.9 18.5 0.5 0.7 1.6
Other liabilities 6.4 4.3 2.2 1.1 3.2 3.2 3.2
Liabilities 80.8 98.6 164.6 205.5 293.9 368.3 383.6
Total liabilities and shareholders' equity 87.5 127.8 214.1 258.9 360.4 434.9 458.4
Total Sales in EUR m
Source: Warburg Research
Properties for sale in EUR m
Source: Warburg Research
Total equity in EUR m
Source: Warburg Research
Noratis
NO T E Publ ished 11 .06 .2020 27
RESEARCH
Consolidated cash flow statement In EUR m 2016 2017 2018 2019 2020e 2021e 2022e Net income 4.2 8.7 9.3 8.7 1.5 2.8 9.6
Increase/decrease in long-term provisions 1.2 1.2 -0.3 -0.3 0.5 0.4 0.0
Cash Flow before NWC change 5.5 9.8 9.2 8.7 2.1 3.4 10.1
Increase / decrease in inventory 8.4 -3.6 -99.8 -46.1 -86.2 -90.2 -19.9
Increase / decrease in working capital (total) 8.2 -3.1 -101.1 -29.2 -104.2 -90.0 -19.0
Net cash provided by operating activities [1] 18.7 12.9 -85.9 -18.3 -96.0 -80.1 -1.5
Net cash provided by investing activities [2] 0.0 -4.1 0.0 0.0 -0.2 -0.2 -0.3
Change in financial liabilities -9.8 -6.4 68.8 26.0 103.7 73.7 14.4
Net cash provided by financing activities [3] -15.4 3.4 75.9 17.4 110.5 66.5 5.3
Change in liquid funds [1]+[2]+[3] 3.3 12.1 -10.0 -0.9 14.4 -13.8 3.6
Effects of exchange-rate changes on cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash and cash equivalent at end of period 5.8 17.9 7.9 7.0 21.3 7.5 11.1
Financial Ratios 2016 2017 2018 2019 2020e 2021e 2022e
Cash Flow
FCF 18.7 12.4 -86.1 -18.5 -96.2 -80.3 -1.7
Free Cash Flow Potential 8.1 11.8 12.2 12.6 6.4 9.3 17.4
Interest Received / Avg. Cash 0.3 % 1.1 % 1.3 % 1.6 % 0.5 % 1.1 % 3.6 %
Interest Paid / Avg. Debt 5.2 % 4.0 % 2.5 % 2.3 % 2.1 % 2.0 % 2.1 %
Management of Funds
Investment ratio 0.1 % 0.7 % 0.4 % 0.2 % 0.6 % 0.5 % 0.3 %
Maint. Capex / Sales 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Capex / Dep 119.5 % 480.1 % 125.3 % 56.6 % 142.5 % 91.9 % 51.0 %
Avg. Working Capital / Sales 189.5 % 132.2 % 266.2 % 281.6 % 1017.4 % 840.2 % 434.4 %
Trade Debtors / Trade Creditors 23.4 % 204.2 % 1256.0 % 44.6 % 260.0 % 300.0 % 287.5 %
Inventory Turnover 0.3 x 0.5 x 0.6 x 0.2 x 0.1 x 0.1 x 0.2 x
Receivables collection period (days) 1 9 156 40 17 17 17
Payables payment period (days) 7 6 6 127 9 8 8
Cash conversion cycle (Days) 1,310 753 729 1,554 6,282 4,895 2,308
CAPEX and Cash Flow in EUR m
Source: Warburg Research
Free Cash Flow Generation
Source: Warburg Research
Working Capital
Source: Warburg Research
Noratis
NO T E Publ ished 11 .06 .2020 28
RESEARCH
LEGAL DISCLAIMER
This research report (“investment recommendation”) was prepared by the Warburg Research GmbH, a fully owned subsidiary of the M.M.Warburg &
CO (AG & Co.) KGaA and is passed on by the M.M.Warburg & CO (AG & Co.) KGaA. It is intended solely for the recipient and may not be passed on
to another company without their prior consent, regardless of whether the company is part of the same corporation or not. It contains selected
information and does not purport to be complete. The investment recommendation is based on publicly available information and data ("information")
believed to be accurate and complete. Warburg Research GmbH neither examines the information for accuracy and completeness, nor guarantees its
accuracy and completeness. Possible errors or incompleteness of the information do not constitute grounds for liability of M.M.Warburg & CO (AG &
Co.) KGaA or Warburg Research GmbH for damages of any kind whatsoever, and M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research
GmbH are not liable for indirect and/or direct and/or consequential damages. In particular, neither M.M.Warburg & CO (AG & Co.) KGaA nor Warburg
Research GmbH are liable for the statements, plans or other details contained in these investment recommendations concerning the examined
companies, their affiliated companies, strategies, economic situations, market and competitive situations, regulatory environment, etc. Although due
care has been taken in compiling this investment recommendation, it cannot be excluded that it is incomplete or contains errors. M.M.Warburg & CO
(AG & Co.) KGaA and Warburg Research GmbH, their shareholders and employees are not liable for the accuracy and completeness of the
statements, estimations and the conclusions derived from the information contained in this investment recommendation. Provided a investment
recommendation is being transmitted in connection with an existing contractual relationship, i.e. financial advisory or similar services, the liability of
M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research GmbH shall be restricted to gross negligence and wilful misconduct. In case of failure in
essential tasks, M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research GmbH are liable for normal negligence. In any case, the liability of
M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research GmbH is limited to typical, expectable damages. This investment recommendation does
not constitute an offer or a solicitation of an offer for the purchase or sale of any security. Partners, directors or employees of M.M.Warburg & CO (AG
& Co.) KGaA, Warburg Research GmbH or affiliated companies may serve in a position of responsibility, i.e. on the board of directors of companies
mentioned in the report. Opinions expressed in this investment recommendation are subject to change without notice. All rights reserved.
COPYRIGHT NOTICE
This work including all its parts is protected by copyright. Any use beyond the limits provided by copyright law without permission is prohibited and
punishable. This applies, in particular, to reproductions, translations, microfilming, and storage and processing on electronic media of the entire content
or parts thereof.
DISCLOSURE ACCORDING TO §85 OF THE GERMAN SECURITIES TRADING ACT (WPHG), MAR AND MIFID II INCL. COMMISSION DELEGATED REGULATION (EU) 2016/958 AND (EU) 2017/565
The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of
fundamental analysis, such as e.g. DCF Model, Free Cash Flow Value Potential, NAV, Peer Group Comparison or Sum of the Parts Model (see also
http://www.mmwarburg.de/disclaimer/disclaimer.htm#Valuation). The result of this fundamental valuation is modified to take into consideration the
analyst’s assessment as regards the expected development of investor sentiment and its impact on the share price.
Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in
demand for the company’s products, changes in management, technology, economic development, interest rate development, operating and/or
material costs, competitive pressure, supervisory law, exchange rate, tax rate etc. For investments in foreign markets and instruments there are further
risks, generally based on exchange rate changes or changes in political and social conditions.
This commentary reflects the opinion of the relevant author at the point in time of its compilation. A change in the fundamental factors underlying the
valuation can mean that the valuation is subsequently no longer accurate. Whether, or in what time frame, an update of this commentary follows is not
determined in advance.
Additional internal and organisational arrangements to prevent or to deal with conflicts of interest have been implemented. Among these are the spatial
separation of Warburg Research GmbH from M.M.Warburg & CO (AG & Co.) KGaA and the creation of areas of confidentiality. This prevents the
exchange of information, which could form the basis of conflicts of interest for Warburg Research GmbH in terms of the analysed issuers or their
financial instruments.
The analysts of Warburg Research GmbH do not receive a gratuity – directly or indirectly – from the investment banking activities of M.M.Warburg &
CO (AG & Co.) KGaA or of any company within the Warburg-Group.
All prices of financial instruments given in this investment recommendation are the closing prices on the last stock-market trading day before the
publication date stated, unless another point in time is explicitly stated.
M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research GmbH are subject to the supervision of the Federal Financial Supervisory Authority,
BaFin. M.M.Warburg & CO (AG & Co.) KGaA is additionally subject to the supervision of the European Central Bank (ECB).
SOURCES
All data and consensus estimates have been obtained from FactSet except where stated otherwise.
Noratis
NO T E Publ ished 11 .06 .2020 29
RESEARCH
Additional information for clients in the United States
1. This research report (the “Report”) is a product of Warburg Research GmbH, Germany, a fully owned subsidiary of M.M.Warburg & CO (AG & Co.)
KGaA, Germany (in the following collectively “Warburg”). Warburg is the employer of the research analyst(s), who have prepared the Report. The
research analyst(s) reside outside the United States and are not associated persons of any U.S. regulated broker-dealer and therefore are not subject
to the supervision of any U.S. regulated broker-dealer.
2. The Report is provided in the United States for distribution solely to "major U.S. institutional investors" under Rule 15a-6 of the U.S. Securities
Exchange Act of 1934 by CIC.
3. CIC (Crédit Industriel et Commercial) and M.M. Warburg & CO have concluded a Research Distribution Agreement that gives CIC Market Solutions
exclusive distribution in France, the US and Canada of the Warburg Research GmbH research product.
4. The research reports are distributed in the United States of America by CIC (“CIC”) pursuant to a SEC Rule 15a-6 agreement with CIC Market
Solutions Inc (“CICI”), a U.S. registered broker-dealer and a related company of CIC, and are distributed solely to persons who qualify as “Major U.S.
Institutional Investors” as defined in SEC Rule 15a-6 under the Securities Exchange Act of 1934.
5. Any person who is not a Major U.S. Institutional Investor must not rely on this communication. The delivery of this research report to any person in
the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion
expressed herein.
Reference in accordance with section 85 of the German Securities Trading Act (WpHG) and Art. 20 MAR regarding possible conflicts of interest with companies analysed:
-1- Warburg Research, or an affiliated company, or an employee of one of these companies responsible for the compilation of the research, hold
a share of more than 5% of the equity capital of the analysed company.
-2-
Warburg Research, or an affiliated company, within the last twelve months participated in the management of a consortium for an issue in
the course of a public offering of such financial instruments, which are, or the issuer of which is, the subject of the investment
recommendation.
-3- Companies affiliated with Warburg Research manage financial instruments, which are, or the issuers of which are, subject of the
investment recommendation, in a market based on the provision of buy or sell contracts.
-4-
MMWB, Warburg Research, or an affiliated company, reached an agreement with the issuer to provide investment banking and/or
investment services and the relevant agreement was in force in the last 12 months or there arose for this period, based on the relevant
agreement, the obligation to provide or to receive a service or compensation - provided that this disclosure does not result in the disclosure of
confidential business information.
-5- The company compiling the analysis or an affiliated company had reached an agreement on the compilation of the investment
recommendation with the analysed company.
-6a- Warburg Research, or an affiliated company, holds a net long position of more than 0.5% of the total issued share capital of the analysed
company.
-6b- Warburg Research, or an affiliated company, holds a net short position of more than 0.5% of the total issued share capital of the analysed
company.
-6c- The issuer holds shares of more than 5% of the total issued capital of Warburg Research or an affiliated company.
-7- The company preparing the analysis as well as its affiliated companies and employees have other important interests in relation to the
analysed company, such as, for example, the exercising of mandates at analysed companies.
Company Disclosure Link to the historical price targets and rating changes (last 12 months)
Noratis 5 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE000A2E4MK4.htm
Noratis
NO T E Publ ished 11 .06 .2020 30
RESEARCH
INVESTMENT RECOMMENDATION
Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of
the analyst who covers this financial instrument.
-B- Buy: The price of the analysed financial instrument is expected to rise over the next 12 months.
-H- Hold: The price of the analysed financial instrument is expected to remain mostly flat over the next 12
months.
-S- Sell: The price of the analysed financial instrument is expected to fall over the next 12 months.
“-“ Rating suspended: The available information currently does not permit an evaluation of the company.
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING
Rating Number of stocks % of Universe
Buy 131 64
Hold 57 28
Sell 10 5
Rating suspended 6 3
Total 204 100
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING R
R taking into account only those companies which were provided with major investment services in the last twelve months.
Rating Number of stocks % of Universe
Buy 32 82
Hold 5 13
Sell 0 0
Rating suspended 2 5
Total 39 100
PRICE AND RATING HISTORY NORATIS AS OF 11.06.2020
Markings in the chart show rating changes by Warburg Research
GmbH in the last 12 months. Every marking details the date and
closing price on the day of the rating change.
Noratis
NO T E Publ ished 11 .06 .2020 31
RESEARCH
EQUITIES Matthias Rode +49 40 3282-2678 Head of Equities [email protected] RESEARCH Michael Heider +49 40 309537-280 Eggert Kuls +49 40 309537-256 Head of Research [email protected] Engineering [email protected]
Henner Rüschmeier +49 40 309537-270 Andreas Pläsier +49 40 309537-246 Head of Research [email protected] Banks, Financial Services [email protected]
Jan Bauer +49 40 309537-155 Malte Schaumann +49 40 309537-170 Renewables [email protected] Technology [email protected]
Jonas Blum +49 40 309537-240 Patrick Schmidt +49 40 309537-125 Telco, Construction [email protected] Leisure, Internet [email protected]
Christian Cohrs +49 40 309537-175 Oliver Schwarz +49 40 309537-250 Industrials & Transportation [email protected] Chemicals, Agriculture [email protected]
Felix Ellmann +49 40 309537-120 Simon Stippig +49 40 309537-265 Software, IT [email protected] Real Estate [email protected]
Jörg Philipp Frey +49 40 309537-258 Cansu Tatar +49 40 309537-248 Retail, Consumer Goods [email protected] Cap. Goods, Engineering [email protected]
Marius Fuhrberg +49 40 309537-185 Marc-René Tonn +49 40 309537-259 Financial Services [email protected] Automobiles, Car Suppliers [email protected]
Mustafa Hidir +49 40 309537-230 Robert-Jan van der Horst +49 40 309537-290 Automobiles, Car Suppliers [email protected] Technology [email protected]
Ulrich Huwald +49 40 309537-255 Andreas Wolf +49 40 309537-140 Health Care, Pharma [email protected] Software, IT [email protected]
Philipp Kaiser +49 40 309537-260 Real Estate [email protected]
Thilo Kleibauer +49 40 309537-257 Retail, Consumer Goods [email protected]
INSTITUTIONAL EQUITY SALES Marc Niemann +49 40 3282-2660 Tobias Hald +49 40 3282-2695 Head of Equity Sales, Germany [email protected] United Kingdom [email protected]
Klaus Schilling +49 40 3282-2664 Maximilian Martin +49 69 5050-7413 Head of Equity Sales, Germany [email protected] Austria, Poland [email protected]
Tim Beckmann +49 40 3282-2665 Christopher Seedorf +49 69 5050-7414 United Kingdom [email protected] Switzerland [email protected]
Lyubka Bogdanova +49 69 5050-7411 Ireland, Poland, Australia [email protected]
Jens Buchmüller +49 69 5050-7415 Scandinavia, Austria [email protected]
Alexander Eschweiler +49 40 3282-2669 Sophie Hauer +49 69 5050-7417 Germany, Luxembourg [email protected] Roadshow/Marketing [email protected]
Matthias Fritsch +49 40 3282-2696 Juliane Niemann +49 40 3282-2694 United Kingdom [email protected] Roadshow/Marketing [email protected]
SALES TRADING Oliver Merckel +49 40 3282-2634 Marcel Magiera +49 40 3282-2662 Head of Sales Trading [email protected] Sales Trading [email protected] Elyaz Dust +49 40 3282-2702 Bastian Quast +49 40 3282-2701 Sales Trading [email protected] Sales Trading [email protected] Michael Ilgenstein +49 40 3282-2700 Jörg Treptow +49 40 3282-2658 Sales Trading [email protected] Sales Trading [email protected] MACRO RESEARCH Carsten Klude +49 40 3282-2572 Dr. Christian Jasperneite +49 40 3282-2439 Macro Research [email protected] Investment Strategy [email protected] Our research can be found under: Warburg Research http://research.mmwarburg.com/en/index.html Thomson Reuters www.thomsonreuters.com Bloomberg MMWA GO Capital IQ www.capitaliq.com FactSet www.factset.com For access please contact:
Andrea Schaper +49 40 3282-2632 Kerstin Muthig +49 40 3282-2703 Sales Assistance [email protected] Sales Assistance [email protected]