Today’s Industry (DI) Recommend to buy Brought to you by Norwegian real estate company Entra, and justifies its purchase recommendation as offering quality properties at a good price.
“It is a quality business with several newly built properties, of which approximately 90 percent are offices. The average age since completion or complete renovation is only eight years, which is unique in the Nordic countries,” he wrote. DI continues:
“This also contributes to lower operating costs due, among other things, to lower energy consumption. The profit margin, generated by operating through rental income, is very high at 92 percent. For investors focused on ESG, Entra should be an obvious choice “.
The share is currently up 3.8 percent, but has fallen 25.5 percent in the past 12 months.
The rating is low
Among other things, DI notes that Entra has had a steady increase in rental income over several years, and they continue to see potential for further growth.
Moreover, the real estate company has loans of approximately NOK 40 billion, while the company is worth about NOK 58 billion including debt. The assets are valued at NOK 82 billion, mainly consisting of management properties worth NOK 77 billion.
In order to arrive at the stock exchange’s valuation, DI writes that values would have to fall by around 30 percent, to NOK 24 billion, which DI considers unlikely.
“With stock valuation the yield is 5.5 per cent, an expected operating profit of NOK 3.2 billion this year based on a company valuation of NOK 58 billion. This shows the valuation is low. The latest net asset value is NOK 207 per share,” Compared to the share price of around NOK 100, it’s more than a 50 percent discount. So, there’s a lot of margin here,” explains DI.
In addition, the paper mentions that Intra’s price-to-earnings figure is around 12, which is low for this type of property.
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