Inbox: CA Immo - Fehlende Upside und Unklarheit bezüglich Immofinanz-Deal

14.2% CAGR of recurring earnings until 2019e: Strong growth of rental income and further declines of interest expenses are the main drivers for our expected double-digit growth of recurring earnings. Given the current German landbank and in light of the moderate gearing of CA Immo (net LTV of 37%) we reckon that business expansion is plausible for the group for the next 10 years, provided that investment and occupier markets do not deteriorate over this time horizon. Based on the detailed disclosure about the active developments with an investment volume of a total of EUR 815 mn we make preliminary group projections for six years, i.e. until 2022e, which are shown in our DCF valuation.
 
Target price raised: Our new target price of EUR 27.4 (EUR 25.0) is based on the average of DCF and RoNAV valuation methods as shown in more detail later in this report. The increase of our target price is due to 1) the use of FFO II (recurring earnings including results from property sales) instead of FFO I and 2) the roll-over of our valuation base year to 2018e. In terms of P/FFO 2018e the group trades at a slight premium to the peers average, while in terms of EV/EBITDA 2018e CA Immo is valued at a discount against its peers.