da Intermonte – ABITARE IN company research report

Buon pomeriggio,

di seguito e in allegato inviamo il company research report relativo ad ABITARE IN a cura di Intermonte.

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Un caro saluto,

Chiara Cattaneo

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Headwinds in 2Q as Delays Bite. ABT Eyes New Revenue Streams

• 2Q results set to show continuity with previous quarters: following on from 1Q trends, 2Q ended with a contraction in results due to persistent delays in the authorisation phase of new projects in the municipality of Milan, a situation that is delaying the development of the company’s important pipeline (2,450 apartments as of 1H24, of which 483 sold on a preliminary basis and 354 under construction). As a matter of fact, consolidated revenues amounted to Eu18.2mn in 2Q, down by 43.6% YoY as a result of: 1) Eu4.1mn in revenues from sales; 2) a Eu2.7mn change in inventory for the purchase of new real estate complexes located in the NoLo district in Milan; 3) Eu8.9mn of work in progress on projects being developed; 4) Eu2.5mn of other revenues. Down the line, profitability was also dented by the delays, with EBT coming to Eu0.3mn, much lower than the Eu21.0mn posted last year, a figure that we point out was inflated by the capital gain realised on the disposal of the Cadolini area. The EBT figure is also negatively affected by a Eu0.5mn write-down on the equity investment in Tecma Solutions. On a more positive note, cash absorption was rather limited in 2Q, with net debt reaching Eu55.4mn at the end of March, up slightly QoQ (Eu49.5mn as at the end of 1Q).
• Push on alternative revenue streams to overcome temporary impasse in Milan: in the current situation, AbitareIn is not only keeping up with marketing and building existing projects, but also venturing into new territories. The company is now offering its development expertise to other real estate players currently working on projects in Milan and Rome. Speaking of Rome, AbitareIn sees promise there and might expand further, with its first project, Bombay Palace, already underway, and the scouting of new areas progressing. Lastly, they’re looking towards sustainable development by exploring ways to renovate existing buildings, aiming for a faster construction and marketing phase, as well as a smaller environmental impact.
• Estimates. Visibility on the unblocking of the authorisation situation in the Milan market remains rather limited at the moment, making it clear that 2024 will now represent nothing more than a year of transition for the company, awaiting a return to normality and a resumption of developing the pipeline, a situation that is currently on hold. In light of this, we are lowering our estimates for 2024 to reflect a further extension of development times, only partially reflected in expectations for the following years, when we continue to expect a recovery.
• OUTPERFORM; target Eu7.10. Despite some uncertainty in the short term related to bureaucratic issues, with the timing of a solution still up in the air (the so-called “Salva Milano” decree under discussions by the Government may not solve all the current issues), we believe that in the longer term ABT has everything in place for significant growth thanks to a robust pipeline, new business segments (servicing, property development in the Rome market) and a core market (Milan) where a significant structural gap exists between the number of new houses being built and the level of demand. In addition, mortgages becoming cheaper for customers and a reduction in construction costs may represent a positive catalyst going forward. We are reducing our TP from Eu7.30 to Eu7.10 to reflect the new estimates.