Warsaw Stock Exchange: MLP Group - Growth story to continue (SUMMARY)
Aa
Share
Buy, PLN 103
Maintained
MLP Group has delivered its ambitious guidance for 2022, improving EBITDA and FFO by 55% y/y and 59% y/y, respectively. The logistics RE market remains strong with a very low vacancy rate in Poland (5.1%, JLL), double-digit rent growth (+22% y/y) and slowing supply (3.6m sqm under construction, 23% down from the peak in 1Q22). It creates a good environment for new development in companies such as MLP Group, which have secured sufficient land bank and financial resources. We are increasing the TP by 6% to PLN 103 per share and maintaining a BUY recommendation.
Key data
Market price (PLN) 82.00
Upside 26% No. of shares (mn) 23.99
Market Cap (PLNmn) 1,967.59
Free float 31%
Free float (PLNmn) 612
Free float (USDmn) 147
EV (PLNmn) 4,077.48
Net debt (PLNmn) 2,109.89
ESG
ESG 6.8
Dividend
Div yield 0.0%
Ex-div
Major Shareholders % of share
Cajamarca Holland B.V. 42.69
ILDC 12.57
Thesinger Limited 7.38
OFE NNLife 6.63
Previous recomm. Date & target price
Buy 01-09-22 98.00
Buy 05-04-22 97.00
Price performance
| WIG | Company | |
| 1 month | 15.5% | 9.0% |
| 3 months | 1.9% | 6.5% |
| 6 months | 31.0% | 18.2% |
| 12 months | 3.4% | 7.0% |
| Min 52 weeks | 58.80 | |
| Max 52 weeks | 89.60 | |
| Av. turnover/day PLN mn | 0.05 |
FFO’23-28 CAGR of 16%
In 2022, MLP Group delivered an excellent 59% growth of FFO, beating our estimates by 19%. The company did not modify the KPIs from its 3-year strategy announced in late 2021, which assumes further FFO growth of 51% in 2023 and 46% in 2024. We perceive those goals as very ambitious, given that the development pipeline as of the end of 2022 was down by 44% y/y (119k sqm under construction). Nevertheless, MLP Group still offers an appealing growth story. We forecast the company to almost double its logistics property portfolio over the next six years from 0.99m sqm as of the end of 2022 to 1.89m sqm in 2028. We also forecast FFO’23-28 to grow by 16% annually despite increased financing costs.
Lower leverage and higher land bank
After the issue of shares in 4Q22, the company’s LTV decreased to a relatively low level of 33.1% (-3,8 p.p. y/y). MLP Group has the financial means to utilise its 0.64m sqm GLA land bank (60% in Poland, 40% in Germany, Austria and Romania), which increased by 11% in 2022.
Large foreign projects to enter construction phase in 2023
We expect that in 2023 MLP Group will accelerate its foreign expansion. As of the end of 2022, only 8% of the completed portfolio (by GLA) was located outside Poland. We estimate this ratio will increase to 17% by 2025.
Valuation
Our valuation is based on the Residual Income Model. According to our calculations, MLP Group’s target price is PLN 103.0 per share, 26% above the current market price.
Comparative valuation
Financial Forecasts
Analyst
Piotr Zybała
+48 883 370 284
Address:
PKO BP Securities
ul. Puławska 15
02-515 Warszawa
