Diös - Above expected value uplifts in Q1

Recurring PTP up 1% to SEK 231m (ABGSCe +2%) EPRA NAVPS 17% to SEK 84 (ABGSCe 14%) ’21e P/CE of 11x is 52% below sector average Stable earnings and more to come NOI, driven by new leases and finished projects, was largely unchanged y-o-y at SEK 290 (against Q1’20, which was the strongest first quarter prior). Property-related costs increased due to the cold winter, but higher efficiency in property management offset this. Recurring PTP grew by 1%, following renegotiated interest costs to lower levels in the last 12 months. Announced acquisitions in Q1 will add SEK 11m to NOI over the coming 12 months, and up until now ~SEK 20m for projects.

This holds cash yield above 8. 5% in coming quarters despite higher EPRA NAV growth. Furthermore, Diös’ residential building rights portfolio (~90,000 sqm) in city locations implies estimate potential.

We lower our estimates across the board, as they were too high in terms of revenue from projects. Historically high value uplifts in ’21e Demand for residentials and offices in Northern Sweden is higher than we had anticipated, and owing to lower yield requirements and better NOIs, value revisions were 1. 7% (we expected 0.

5%). EPRA NAVPS was SEK 84 (+3% vs. ABGSCe), corresponding to 6% q-o-q and 17% y-o-y (adj.

for DPS). We revise value uplifts for FY‘21e to 3. 2% (2.

0%) based on the Q1 beat. Only in 2011 and 2018 in the last 10 years has this figure been higher (3. 4% and 3.

9%). Due to increased indebtedness in newbuilds, NIBD/EBIT was up to 12. 3x (11.

6x in Q1’20), and Diös stated that it sees potential to increase its capital market financing. Growth above and price below the sector On ’21e P/CE, Diös trades at a P/E of b11x, 52% below the sector average of ~21x. On ‘21e P/EPRA NAV, the share is trading 12% below at 88%.

It is now trading in line with its P/EPRA NAV last five years’ average of 93% on last reported figures. Meanwhile, our ’21-23 estimates show 9%, 8% and 7%, respectively, in cash earning.