Original-Research: Coreo AG - von GBC AG

Einstufung von GBC AG zu Coreo AG

Unternehmen: Coreo AG

Anlass der Studie: Research Report (Initial Coverage)
Empfehlung: BUY
Kursziel: EUR 3.10
Kursziel auf Sicht von: 31/12/2019
Letzte Ratingänderung:
Analyst: Cosmin Filker; Marcel Goldmann

Attractive 'value-add' real estate specialist, Fast portfolio expansion
achieved, value-creating growth strategy to be supported by capital
increase, high share price potential

Coreo AG is currently executing a subscription-rights capital increase with
projected gross issue proceeds of up to EUR 16 million. The liquidity
proceeds will be used to acquire commercial and residential real estate for
the 'value-add' business segment. In accordance with the corporate
strategy, the focus is on medium-sized cities in Germany which have not yet
been affected by the strong price increases thus enabling adequate rental
returns. The goal is to build a high-yielding portfolio in terms of
purchase prices. Currently (pre money), the company has a projected NAV
(based on GBC calculations) of EUR 2.40. Our fair value rating on DCF basis
(post money) is even higher (see below).

The company was known as Nanostart AG until 2016 and was active as an
investment company in the nanotechnology sector. The company and corporate
purpose were changed to real estate as a result of a resolution passed by
the Annual General Meeting in 2016. The majority of the investments (made
in previous years) have since been sold. As of 30 June 2018, the company
still held a little bit more than 2 million shares and thus almost 7.7% of
the listed company MagForce AG. Since 2017, Coreo has been investing in
residential and commercial properties/portfolios, primarily in the value-
added segment, in line with its value-creating growth strategy. The sale of
non-strategic portfolio elements generates short-term capital gains. At the
same time, the remaining properties are being developed and optimised in
order to increase long-term rental income and consequently create potential
for value appreciation.

Since launching the new corporate strategy, the company has already
completed five transactions with a total investment volume of just under
EUR 41 million. The properties are all located in the B and C locations
addressed by Coreo AG and have comparatively high rental yields of more
than 10%. In the current 2018 financial year, the largest investments in
terms of volume involved the acquisition of the residential real estate
portfolio in Göttingen and the Hydra portfolio. The acquired portfolios
will be held for producing long-term rental income. In addition, individual
properties are being revitalised or rebuilt in order to benefit from
expected increases in value. The company also plans to raise hidden
reserves within the scope of property sales. Access to liquidity from
property sales is then to be used for the planned investments
(revitalisation, conversion, etc.). It can also be assumed that the company
will successively reduce its stake in MagForce AG, thereby releasing
further liquidity.

The basis for our sales and earnings forecasts is the current real estate
portfolio and assumed investments following the current capital increase.
The forecasts and valuation are therefore a so-called of post-money
consideration. We have also taken note of the unusual fact that Coreo AG
until now does not consolidate the property companies (note: all properties
are held in subsidiaries of the legal form GmbH and GmbH & Co. KG). The
after-tax result of the property companies is consequently only reported as
investment income in the financial result of Coreo AG. We are 'moving up'
this net income position to the gross profit of Coreo AG, which means that
the property income will be part of the operating result (EBITDA, EBIT).

For the current and upcoming financial year, we expect a tangible increase
in income and profit. In addition to the increase in rental income, the
company is expected to generate significant sales proceeds and uncover
hidden reserves. As income from participation represents a residual value,
Coreo AG should achieve high profit margins of up to 65%, according to our
plans. At the level of a property company, the profit margin is lower, but
still at the upper end of the industry-standard key figures.

Based on our DCF model (post-money), we have calculated a target price of
EUR3.10. Based on the current share price and the placement price within
the context of the current capital increase of EUR 1.60 per share, our
recommendation is BUY.

Die vollständige Analyse können Sie hier downloaden:

Kontakt für Rückfragen
Jörg Grunwald
Halderstraße 27
86150 Augsburg
0821 / 241133 0
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (4,5a,5b,6a,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
Date and time of completion (german version): 29/11/2018 (5:13 pm)
Date and time of first distribution (german version): 30/11/2018 (8:30 am)
Date and time of completion (english version): 05/12/2018 (9:26 am)
Date and time of first distribution (english version): 05/12/2018 (10:00 am)

-------------------übermittelt durch die EQS Group AG.-------------------

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