Financial forecasts
3Q23E & 2023E:
Given projects schedules, we forecast that Marvipol Development will deliver 46 units in 3Q23E, vs. 73 flats handed over in 3Q22. Despite expected significantly higher gross profitability in the delivery mix (we arrive at 37.2%, vs. 25.0% in the corresponding period in 2022), we forecast that revenues may reach PLN 73.7m, EBIT will amount to PLN 17.5m (vs. PLN 18.3m in 3Q22) and net profit may come in at PLN 13.0m (vs. PLN 18.9m in 3Q22). We note that 3Q22 net profit was boosted by net financial income of PLN 4.4m. In full-year terms, we assume that the developer will deliver 439 apartments (-52% y/y), with the average dwelling price of PLN 897.0k (+39% y/y, due to price hikes and a more favourable mix). In our base-case scenario, revenues will arrive at PLN 393.7m (-33% y/y), the gross margin would increase to an extra-ordinary 32.0% (+7.7pp. y/y) and net profit would deteriorate to PLN 66.8m (vs. PLN 89.9m in 2022). Concurrently, pre-sale volumes may grew by 139% y/y to 495 apartments, driven by a demand recovery and expected expansion in dwellings in the offer.
2024E: 2024E
results are expected to be driven by projects with significantly lower margins, due to pressure coming from the cost side (e.g. increases in construction costs). As of now, we anticipate that the average gross profitability will deteriorate to 18.0% (we assume poor margins in the case of Motława Garden and In Place I projects). Thus, despite the higher number of deliveries, we forecast that Marvipol Development will report revenues of PLN 427.9m, EBIT of PLN 42.4m and net profit of PLN 34.8m (+9%/-55%/-48% y/y, respectively). We note that we do not include the effect of divestments in the logistics division, but the group intends to dispose of its logistics projects. From the positives, we firmly believe that the company will continue its recovery in number of pre-sold flats, as we arrive at 586 units in 2024E (+18% y/y).
Long-term perspectives and dividend policy:
We expect that Marvipol Development will improve its results in 2025E, due to more profitable projects and improving pre-sales (we arrive at a net profit of PLN 57.5m). In the long-term perspective, we assume that the developer will be able to pre-sell and to deliver 600-700 dwellings per year, with margin of 21.7-22.7%, vs. the historical average of 23.7%. Moreover, we believe that the group will return to recurrent dividend payments already in 2024E (DPR of 50%).
