It seems like management shares this view, as the company announced yet another share buy-back program after having already bought back shares worth € 2.4m in Q4. In detail:

Last week, the management of S IMMO resolved another repurchase program of up to 365,340 shares (c. 0.5% of share capital; € 5.1m given an avg. price of € 14 per share). Shares are going to be bought back over the stock exchange at a maximum 15% premium to the 10-day VWAP while the price must not exceed € 15 per share. The program starts today and will run until March 31^st.

Although the scope of the program is rather small, it is a reasonable step which points towards the undemanding valuation of the shares. In fact, S IMMO is offering one of the most appealing risk/reward profile in the industry:

• Loan-to-value: As of Q3’23 S IMMO is providing an LTV ratio of 38.1% which compares to our peer group’s average of > 40% (e.g.: Vonovia: 46.8%; LEG: 46.8%; Aroundtown: 41.3%).
• Equity ratio: A similar picture emerges when looking at the equity ratio which stood at 46.0% at S IMMO as of Q3’23 (e.g.: Vonovia: 32.8%; LEG: 40.4%; Aroundtown: 46.6%).

Furthermore, S IMMO continues to create shareholder value by scaling up its engagement in the high yielding CEE region. Just recently the company acquired another portfolio with a 6% yield (€ 29m annual rental income) in the Czech Republic. To fund the expansion in CEE, S IMMO continuously disposes a significant portion of its residential portfolio in Germany. While € 621m have been already sold here, another € 400m are still in the pipeline (€ 250m in Germany). The ongoing rebalancing of the portfolio (e.g selling in Germany & buying in CEE) is seen to significantly increase rental income (eNuW: +26% in ‘24e) and FFO (+16% in ’24).

Despite best-in-class metrics and a strong YTD performance, S IMMO is yet trading on an NTA-discount similar to the peer group (-43% as of Friday’s close price).

Stock hence remains a strong BUY with an unchanged PT of € 17.00 based on NTA and DDM.