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Original-Research: publity AG (von GBC AG): Hold

um 12:31 Uhr


Original-Research: publity AG - von GBC AG

Einstufung von GBC AG zu publity AG

Unternehmen: publity AG
ISIN: DE0006972508

Anlass der Studie: Research Report (Note)
Empfehlung: Hold
Kursziel: 17.00 EUR
Kursziel auf Sicht von: 31.12.2024
Letzte Ratingänderung:
Analyst: Matthias Greiffenberger, Marcel Schaffer

Focus on sustainable office properties. Positive outlook.
The business trajectory in the first half of 2023 reflects noteworthy
advancements for publity AG despite prevailing challenges in the real
estate industry. However, revenues experienced a substantial downturn,
decreasing to EUR2.01 million in the first half of 2023 (compared to EUR9.95
million in the previous year). These revenues were generated through
publity's successful transactions as an asset manager.
The significant dip in revenue consequently led to a decline in EBITDA to
EUR-1.46 million (compared to EUR6.63 million in the previous year). On a
positive note, other operating income had a notable impact, reaching EUR1.02
million (a significant increase from EUR0.03 million in the previous year),
primarily stemming from a legal dispute. Overall, operating costs remained
predominantly stable, with marginal adjustments in the cost of materials
(-2.0%) and a slight uptick in personnel expenses (+3.3%). Conversely,
other operating expenses rose to EUR3.43 million (compared to EUR2.31 million
in the previous year) due to partial revenue from the PREOS convertible
bond, transacted below the original price. Adjusted for this effect, costs
actually experienced a reduction.
Income from other securities witnessed a 14.5% decline to EUR2.95 million
(compared to EUR3.45 million) owing to the diminished volume of PREOS Global
Office Real Estate & Technology AG bonds on the balance sheet. Furthermore,
interest and similar expenses increased by 17.7% to EUR-2.74 million
(compared to EUR-2.33 million) due to the augmentation of the publity bond,
issued in the second half of 2022, by EUR20 million to EUR97.76 million
(compared to EUR77.76 million in the previous year).
The sharp decrease in revenue resulted in a negative net result of EUR-1.53
million (compared to EUR5.23 million in the previous year).
publity's financial statement mirrors a typical profile for investment
companies, marked by a substantial level of financial assets, notably the
shares held in PREOS constituting the majority. Despite the impressive
equity interest of 94.3%, these shares in the subsidiary are not fully
consolidated but are acknowledged as financial assets. The absence of full
consolidation means that the liabilities of the real estate companies GORE
and PREOS are not entirely reflected, contributing to publity AG
consistently maintaining an above-average equity ratio. Variations in
equity stem from both operational business dynamics and the appreciation or
depreciation of financial assets. As of June 30, 2023, there was no
extensive revaluation of financial assets.
As of June 30, 2023, equity remained nearly unchanged at EUR370.66 million
(compared to EUR372.19 million on December 31, 2022), primarily influenced by
an annual loss of EUR1.53 million. Consequently, the equity ratio also held
steady at 76.2% (compared to 76.4% on December 31, 2022).
publity AG's balance sheet prominently features investments in affiliated
companies, amounting to EUR367.3 million (compared to EUR366.94 million on
December 31, 2022), constituting 75.5% of total assets (compared to 75.3%
on December 31, 2022). Additionally, publity AG holds bonds from PREOS
Global Office Real Estate & Technology AG valued at EUR81.0 million (compared
to EUR83.98 million on December 31, 2021). These financial assets are
encompassed in the net financial assets, totaling EUR374.81 million (compared
to EUR377.87 million on December 31, 2022).
The primary component of debt capital is an outstanding publity bond valued
at EUR97.76 million (unchanged from December 31, 2022). This bond matures in
2027, and its terms were adjusted at the end of 2022, including an
extension of the term to 19.12.2027 (originally 19.06.2023), an interest
rate increase from 5.5% to 6.25% from 19.06.2023, and the introduction of
an option for early repayment. As of October 18, 2023, the bond is trading
at 28.0% on Tradegate at 15:34. The extension of the publity bond is
potentially subject to challenge by bondholders.
Liabilities to banks remain steady at EUR4.3 million (unchanged from December
31, 2022), and cash and cash equivalents amount to EUR0.38 million (compared
to EUR0.54 million on December 31, 2022). The management perceives the
liquidity situation as stable. Working capital has significantly increased
to EUR3.39 million, compared to EUR-0.19 million as of December 31, 2022,
primarily attributed to the rise in trade receivables to EUR4.35 million from
EUR1.16 million as of December 31, 2022. This increase is presumed to be a
response to the current challenging situation in the real estate industry,
potentially leading customers to exhaust their payment terms.
Due to the absence of a published cash flow statement, a more comprehensive
liquidity analysis is currently unfeasible.
On August 16, 2023, the Annual General Meeting sanctioned a capital
increase from company funds, proposing an augmentation of share capital
from EUR14.88 million to EUR16.74 million, involving the issuance of 1.86
million new no-par value shares with a nominal value of EUR1.00 each.
However, the finalization of the capital increase is still pending.
As of December 30, 2022, the share price for the investment in PREOS Global
Office Real Estate & Technology AG was EUR3.40 (Xetra), representing a market
capitalization of EUR385.79 million. Considering publity AG's substantial
94.3% shareholding, the reported value of the held share capital in
publity's balance sheet was EUR363.8 million. However, the PREOS share price
has experienced a significant decline since December 30, 2022, currently
standing at EUR0.41 (XETRA, October 23, 2023). This decline poses a notable
valuation discount affecting earnings. In our revaluation, we do not rely
on the current PREOS share price; instead, we utilize the published equity
of PREOS Global Office Real Estate & Technology AG, which amounted to
EUR203.56 million as of December 31, 2022, as a conservative lower limit.
Corresponding to the 94.3% shareholding ratio, this equates to a value of
EUR191.96 million.
As of June 30, 2022, loans to affiliated companies stood at EUR81.0 million.
These loans are in the form of convertible bonds issued by PREOS Global
Office Real Estate & Technology AG in 2019 and maturing in 2024. The
current price of the convertible bond is 1.26% (Frankfurt, October 19,
2023). Klaus Nieding, lawyer and Vice President of Deutsche
Schutzvereinigung für Wertpapierbesitz, has been appointed as the contact
person for the bondholders. The next step involves engaging in discussions
with the joint representative to explore potential restructuring options
for the PREOS convertible bond. Given the considerable potential for the
convertible bond to be written down, we have initially assumed a 50%
impairment in our valuation.
Despite facing persistent challenges such as high interest rates, increased
construction costs, and uncertainties in the economic landscape within the
real estate sector, the company remains optimistic about its recovery,
attributing this confidence to its position as a green asset manager. In
response to macroeconomic challenges and evolving trends in real estate,
the company is strategically focusing on sustainable office properties. The
goal is to manage at least 50% ESG-compliant buildings by 2030, with a
long-term objective of achieving 100%. The approach is holistic,
encompassing environmental considerations, innovative design options, and
social aspects. publity AG has already secured several certifications for
its properties, showcasing high ESG and digitalization standards.
Additionally, there are plans to convert the Centurion Tower in Frankfurt
into a green office building, serving as a model for the future of office
The corporate strategy of publity AG centers on fortifying and expanding
its position as a portfolio holder in the real estate sector through its
subsidiaries. The primary focus remains on the German commercial real
estate market, where attractive value creation potential is identified.
Leveraging its expertise in real estate asset management, publity AG aims
to capitalize on the sustained demand for German commercial real estate,
particularly from foreign investors.
While the impacts of the coronavirus pandemic, the conflict in Ukraine, the
energy crisis, and rising interest rates on the company's economic
trajectory are challenging to predict, the Management Board anticipates
stabilization and positive development.
The Executive Board expects to break even after taxes in the course of the
2023 financial year, with a slightly positive EBIT forecast. In addition,
the Executive Board expects to be able to meet all financial obligations in
full and on time in the future.
We assume that there will be an increase in real estate transactions in the
2023 financial year compared to the previous year 2022. However, the market
is currently heavily impacted by the turnaround in interest rates. For the
current financial year 2023, we forecast revenue of EUR11.5 million, followed
by EUR15.0 million in 2024 and EUR20.1 million in 2025.
In accordance with the company's guidance for the 2023 financial year, the
Executive Board expects to break even after taxes and achieve a slightly
positive EBIT. The company continues to respond with strict cost management
in order to meet the current challenges. Our earnings forecasts do not
include any potential write-downs on the financial assets held.
We assume that the guidance can currently be easily achieved. For the
current financial year 2023, we expect EBIT of EUR0.3 million, followed by
EUR3.32 million in 2024 and EUR6.64 million in 2025.
Overall, we expect net income of EUR0.28 million in the current financial
year 2023, EUR2.39 million in 2024 and EUR4.71 million in 2025.

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Date and time of completion of the study: 17.11.2023 (12:00) German version: 13.11.2023 (10:00)
Date and time of the first publication of the study: 17.11.2023 (12:30) German version: 13.11.2023 (11:30)

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publity AG

WKN 697250 ISIN DE0006972508