Topic: CR Energy released its H1 report, which shows a strong operating performance of the portfolio companies. Moreover, the company conservatively did not perform a revaluation of the holding companies in H1. In detail:

In H1 the portfolio companies showed a positive operating development, achieving a combined net income of € 9.5m. Due to the profit and loss transfer agreements with the holding companies, the profits from the investments will be transferred to CRE at the end of the year. Hence, they did not impact the P&L in H1. As the company conservatively did not perform a revaluation of the holdings in H1, total sales thus amounted to € 0.1m in the first half of the year.

CRE as an investment company does not fully consolidate its holdings. Thus, only changes in fair value and profit transfers from the investments are recognized in the income statement in accordance with IFRS 10. In combination with an expected positive valuation result, the profit transfer at YE will lead to a significant increase in total sales at FY ‘24e compared to the H1’ result. Overall, we expect the holding companies to continue their strong performance in the course of H2.

Notably, CRE’s portfolio company Terrabau, a general contractor specialized on sustainable and affordable living, handed over a total of 170 residential units with a total area of more than 11k sqm to its customers by H1. For the second half of the year, the completion of a further 5k sqm of living space is planned. Here, the strong synergy effects between the portfolio companies should become evident again, as CRE’s subsidiary Solartec, a specialist in the design of sustainable energy systems, will equip the completed residential units with its solar systems.

Furthermore, subsidiary CR Opportunities (CRO) issued its first RAIF in H1, which will be followed by an ELTIF in the remainder of H2 (eNuW). The fund shall be populated with properties from Terrabau’s development projects as well as suitable existing properties with value-add potential, thus once again capitalizing on the strong synergies between the holding companies.

Reiterate BUY with an unchanged € 12 PT based on DDM.