Where it all comes together!
RESEARCH:
LUNDIN PET: REIT BUY, UP PT from SEK155(162) Positive Johan Sverdrup news
DETNOR: REIT BUY, UP PT from NOK125(128) better production level,lower cap
STATOIL: REIT BUY, PT NOK160support update on development costs in Norway
AURORA LPG: REIT HOLD,CUT PT NOK22.50(11)
Balder (Buy) – Q2: operative profit slightly above consensus, value changes 1.5% in the quarter (market comment)
Balder Q2 2016 results
· Rental income at SEK 1,307m, up 98% y-on-y and 1% below our 1,322m estimate, in line with consensus of SEK 1,305m
· Net operating income at SEK 896m, 1% below our SEK 901m expectation and 1% above consensus of SEK 885m. Property costs were SEK 411m compared to our estimate of SEK 421m
· Profit before from property management at SEK 643m, 3% below our expectations of SEK 666m as financial costs were SEK 245m compared to our estimate of SEK 235m and administration costs were SEK 123m compared to our estimate of SEK 108m. Profit from property management was 2% above consensus estimate of SEK 633m
· Value changes: unrealized value changes of SEK 1,021m equivalent to 1.5% of the property value (we expected 1.0% or SEK 700m). The increase is attributable to improved operating income and slightly lower yield. The property valuation yield was unchanged at 5.4%
· NAV: EPRA NAV declined marginally from SEK 170.15 after Q1 to SEK 169.39 at the end of Q2. Equity per share declined from SEK 136.39 in Q1 to SEK 132.45 in Q2
· Earnings capacity increased slightly from Q1; profit from property management in current portfolio is SEK 2,190m on a twelve month basis compared to SEK 2,050m at the end of Q1
Conclusion: the Q2 report is largely in line with consensus estimates and should not lead to significant earnings revisions. Property value changes above our expectations as has been the case for basically all Swedish real estate companies in Q2. The share price reaction should be neutral to slightly positive on the small positive deviation to consensus.
