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Diös: Strong fundamentals for continuous growth - ABG

Solid Q3 net leasing of SEK 29m
Historically high value change trend continues in ‘22-‘23e
Fair value range of SEK 90-120 added

Q3 saw the completion of the Clarion Hotel in central Sundsvall, the first out of a handful larger projects to be completed within the next 3-24 months. Underlying demand was further showcased by SEK 29m in net leasing for Q3, among the highest in the sector. Added capital market financing at solid rates has resulted in lower interest costs, which lends support to our positive revisions, while somewhat higher expected current tax weighs slightly in ’22-‘23 (CEPS up by 0.3-0.8%). We expect a CEPS CAGR of 9% in ‘20-‘23e (vs. 4% in ’17-‘20), mainly as a result of contribution from completed projects and continuously reliable income from Diös’ high-yielding assets.

The share currently trades at a NTM P/CEPS of 13.3x and a premium to EPRA NRV of 3%. This is 28% and 15% below, respectively, compared to our peer group of Kungsleden, Nyfosa and Wihlborgs. We assign a fair value range of SEK 90-120, which, based on our NTM estimates implies P/CEPS of 11.8x-15.8x and P/EPRA NRV of 0.91x-1.22x.
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