Investors House: Q3 results strong, in no hurry to engage in new transactions - Nordea

Investors House reported Q3 revenues of EUR 1.9m, 1% above our estimate. Net operating income was EUR 0.9m, 47% above our EUR 0.6m estimate as Real Estate-segment NOI was stronger than we expected. Services-segment EBIT was weak and there are quarterly fluctuations in the segment depending on e.g. success fees. The Q3 reported operative result (EPRA) was EUR 0.7m, down 21% y/y and was a result of significant disposals in the Real Estate-segment in Q4 2021. Reported EBIT of EUR 0.3m included EUR -0.3m of fair value changes and EUR 0.1m of losses from disposals. The 2022 guidance is intact: the operating result to decline significantly owing to divestments conducted in Q4 2021. EPRA NRV was EUR 5.70 per share, down from EUR 6.46 at the end of Q2 2022. EPRA NRV declined 33% from EUR 8.55 a year ago as an extra dividend of EUR 1.0 was distributed. The Services business accounted for 54% of sales and Real Estate for 46%, same as a year ago. Equity ratio remained strong at 58%. Investors House trades at a 12% discount to EPRA NRV and the discount has declined slightly from 16% after the Q2 report. The company has a very strong cash position following Real Estate divestments and is patiently waiting for new investment opportunities. It appears that no new transactions will be made in the short-term as the CEO believes it will take time for prices and yields to stabilise in the market. We expect a slightly positive share price reaction on Investors House’s Q3 report.