Renta 4 | During the Iberian Reit event held yesterday, D. Ismael Clemente (CEO of Merlin Properties) opened the door to a downwards revision of 2022 targets in the event the war in the Ukraine drags on. In this respect, although he believes that 2022 will be a positive year for the company, the increased growth expected for this year could be delayed until 2023 or 2024.
That said, for the time being Merlin is maintaining its targets: 1) operating profit of over 300 million euros in 2022, up 10% on 2021; 2) a dividend of, at least, 0,45 euros per share.
Meanwhile, in line with the information in the daily newspaper Expansion, we recall that BBVA, Merlin and SanJosé, the three partners in the Distrito Castellana Norte (DCN) project have been given a date in May for the arbitration hearing presented by Merlin (14.46%) and San Jose (10%), the minority shareholders, against BBVA (75.54%). The hearing is to defend their right to buy preference shares in Madrid Nuevo Norte. The ruling, which just one judge setttles, is expected to be issued between August and September.
Valuation:
- This is news with a negative bias, but for the time being we believe it will not have an impact on the share price. The environment of high inflation benefits the company in the first instance. However, the lower economic growth derived from the armed conflict, negatively affecting companies, private consumption and job creation, would have a negative impact on real estate firms‘ investment thesis. We reiterate our Overweight recommendation with a Target Price of 12,60 euros/share
