UBM released a soft set of Q2 results following last week’s warning in connection with the extraordinary revaluation of the company’s projects and standing assets.

Q2 sales declined significantly yoy to € 20.0m (-64% yoy; eNuW: € 25.0m) following the ongoing standstill on the real estate transaction market and no major sales in the quarter. Minor contributions came from two residential projects in the Czech Republic.

As a result of the extraordinary portfolio valuation, EBT came in at a negative € 32.7m, which is better than initially communicated (€ -35m). Notably, UBM had the entirety of its projects and real estate surveyed, implying that the current market developments should be fully reflected in the impairments made in the second quarter. Hence, UBM is not seen to face further write-downs when the company will conduct another revaluation in Q4. We thus regard the FY guidance of cutting the H1 EBT (€ -31.6m) in half as achievable (eNuW: € -17m).  

Moreover, CEO Winkler stated that the company is not expecting an improvement in the current situation in H2. Management further indicated that the targeted disposal of the Timber Pioneer in 2023 is now regarded as unlikely. However, while this will likely cause a continuation of uninspiring top-line development, it is also a positive sign that the company does not have to get rid of properties in a fire sale scenario. The basis for this is UBM’s strong cash position of € 214m as of H1. Although the cash position is seen to shrink to € 165m until YE following the repayment of the 2018 bond (€ 91m), this marks a significant advantage over most peers, as UBM has de facto no financing need until Q4’25e. This puts the company in a comfortable position until the drought in the market is approaching its end and also provides the opportunity to snap some lucky-buys.

Although it remains unsecure when the market will reopen, it should be certain that UBM will be one of the major beneficiaries once investors start buying again, as the company is Europe’s leading provider of hybrid-timber properties. A product, which is seen at high demand going forward, as investors must comply with the EU taxonomy.  

Hence, the mid-term prospects of the company remain intact, despite short-term market headwinds, in our view. We hence reiterate BUY with an unchanged PT of € 31.00 based on DDM.