Investors House

Investors House reported Q1 2023 revenue of EUR 1.7m, 13% below our estimate, and net operating income (NOI) of EUR 0.1m, clearly below our EUR 0.7m forecast, as several one-offs (EUR -0.4m total) burdened the results. Reported earnings were EUR -0.2m, down from EUR 0.2m in Q1 2022, with the the one-offs explaining the y/y change. The share of revenue from Services was 48%. Investors House has initiated several earnings-enhancing measures, including searching for new growth investments to increase recurring revenue as well as cost measures. The company is still waiting for the market to stabilise before making new investments and will closely monitor acquisition opportunities to enhance its return on capital. Marketing material commissioned by Investors House.

Investors House reported Q1 revenues of EUR 1.6m, -13% versus our estimate. Net operating income was EUR 0.1m, clearly below our EUR 0.7m estimate but includes EUR -0.4m of one-offs. Both Real Estate and Services segments were weaker than we expected. The Q1 reported operative result (EPRA) was EUR -0.2m versus EUR +0.2m a year ago. Adjusting for one-offs, the reported operative result was broadly flat y/y. Reported EBIT of EUR -0.1m included EUR -0.1m of fair value changes. The 2023 guidance was reiterated: earnings will remain at the same level as in 2022. We have expected a slight increase in earnings in 2023. EPRA NRV was EUR 5.66 per share. The Services business accounted for 48% of sales and Real Estate for 52%. Equity ratio weakened slightly q/q to 58% from 60% and cash position was EUR 5.6m. The company initiates programmes to improve profitability. Measures include continued search for growth projects as well as increase of recurring revenue and lowering of costs. The improvement period is set for 2023-26 and will gradually improve earnings during the period. We expect a slightly negative share price reaction on Investors House’s Q1 report which was on the weak side.

Investors House hosted a webcast CMD on 20 March. The company gave an update on current operations of e.g. businesses acquired over the past two years, including Juhola Asset Management and Infonia. The company has gone through a significant transformation over the last two years as a EUR 56m office portfolio and a EUR 15m residential portfolio were divested. Investors House has strengthened its balance sheet (equity ratio 60%) and invested into property services businesses so that today ~60% of revenue is derived from services. According to the company, nearly 90% of revenue comes from recurring revenues (rents and fixed service fees) and slightly over 10% from commission-related income. The recurring revenue stream exceeds 20% of all costs, including net financials. Investors House has a large cash position and ample room to increase leverage (covenant: equity ratio 45%) but is in no hurry to find new investment or acquisition targets given the uncertain market outlook within real estate. Going forward, the company will focus on adding predictable cash flow acquisitions and at the same time ensuring that it can continue to pay a steadily increasing dividend. We estimate a dividend yield of 6.2-6.9% for 2023E-25E. The share is currently trading at a 15% discount to EPRA NRV and our fair value range is EUR 4.4-6.8, based on a combination of valuation methods, with the greatest emphasis being on EPRA NRV. The information provided at the CMD does not lead to any estimate changes.

Investors House reported Q4 revenue of EUR 2.1m, 4% above our estimate, and net operating income (NOI) of EUR 0.7m, 18% below our EUR 0.8m forecast, as Real Estate posted higher property costs compared to our estimates. EPRA earnings were EUR 0.4m, down by 60% y/y, owing to divestments conducted in Q4 2021. The share of revenue from Services was 59%. Investors House succeeded in streamlining its operations and its balance sheet through an extra dividend of EUR 1 per share in 2022, which has reduced the EPRA NRV discount further to 5%, from 40% at the end of 2021. The company is waiting for the market to stabilise before it enters new investments and will closely monitor acquisition opportunities to enhance the return on capital. Marketing material commissioned by Investors House.

Investors House reported Q4 revenues of EUR 2.1m, +4% versus our estimate. Net operating income was EUR 0.7m, -18% versus our EUR 0.8m estimate as the Real Estate segment net operating income was below our estimates. Services segment EBIT of EUR 0.2m exceeded our estimates. The Q4 reported operative result (EPRA) was EUR 0.4m, down 60% y/y and was a result of significant disposals in the Real Estate-segment in Q4 2021. Reported EBIT of EUR 3.0m included EUR 2.6m of fair value changes, of which the Tikkurila zoning contributed positively while property value declined. The 2023 guidance is was as follows: earnings will remain at the same level as in 2022. The company will not guide for EPRA earnings anymore as the company structure has shifted more towards services. We have expected a slight increase in earnings in 2023. EPRA NRV was EUR 6.23 per share. EPRA NRV declined 25% from EUR 8.27 a year ago as e.g. an extra dividend of EUR 1.0 was distributed. The Services business accounted for 59% of sales and Real Estate for 41%, versus 56% and 44% a year ago, respectively. Equity ratio improved further to 60%. 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 neutral to slightly negative share price reaction on Investors House’s Q4 report.

Investors House announced yesterday (11 January) that its zoning plan for Neilikkatie 17 in Tikkurila, Vantaa has been confirmed. This will enable the construction of 10,000 m2 apartments and Investors House has signed in June 2021 a preliminary agreement for the plot sale. The estimated pre-tax impact of the deal is around EUR 3m and will be booked to the Q4 2022 result. The deal is expected to close during H1 2023 and the cash flow impact will be visible during 2023, according to the company. We have not included the deal in our estimates as the timing has been uncertain while we have estimated the impact to be EUR 2m eventually, so the financial impact of the deal is around EUR 1m higher than we have expected. The transaction will further strengthen Investors House’s strong financial position and based on our calculations enables M&A of over EUR 30m. However, given the recent market turbulence, we do not believe Investors House to be in a hurry to conduct acquisitions, which are likely to focus on the Service segment with the Real Estate segment’s relative share of Investors House’s NAV declining.

Investors House reported Q3 revenue of EUR 1.9m, 1% above our estimate, and net operating income (NOI) of EUR 0.9m, 47% above our EUR 0.6m forecast, as Real Estate posted clearly lower property costs, explained by a significantly increased share of net leases. Adjusted EBIT including associates was EUR 0.7m in Q3, 37% above our EUR 0.5m estimate. The Q3 EPRA result was EUR 0.7m and declined by 21% y/y, owing to divestments conducted in Q4 2021. The share of revenue from Services was 54%. Investors House has succeeded in streamlining its operations and balance sheet by distributing Ovaro shares and an extra dividend of EUR 1 per share, which has reduced the EPRA NRV discount further to 12%, from 40% at the end of 2021. The company is waiting for the market to stabilise before it enters new investments, as it sees further downside to valuations. Marketing material commissioned by Investors House.

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.

Investors House reported Q2 revenue of EUR 1.9m, 5% below our estimate, mainly owing to Services. Net operating income (NOI) was EUR 0.6m, 29% below our EUR 0.9m forecast, as Real Estate posted elevated property costs. Adjusted EBIT including associates was EUR 0.5m, 37% below our EUR 0.8m estimate. The Q2 EPRA result was EUR 0.4m and declined by 48% y/ y owing to divestments conducted in Q4 2021. The share of revenue from Services was 57%. Investors House has succeeded in streamlining its operations and balance sheet by distributing Ovaro shares and an extra dividend of EUR 1 per share, which has reduced the EPRA NRV discount to 16% from 25% after the Q1 report and from 40% after the Q4 2021 report. Marketing material commissioned by Investors House.

Investors House reported Q2 revenues of EUR 1.9m, 5% below our estimate, mainly owing to weaker top line in Services while Real Estate top line was as we expected. Net operating income was EUR 0.6m, 29% below our EUR 0.9m estimate as Real Estate-segment NOI was weak, 26% below our estimate. Services-segment EBIT was 30% below our estimate. The Q2 operative result (EPRA) was EUR 0.4m, down 48% y/y and was a result of significant disposals in the Real Estate-segment in Q4 2021. Reported EBIT of EUR 0.5m included no fair value changes. The 2022 guidance is intact: the operating result to decline significantly owing to divestments conducted in Q4 2021. EPRA NRV was EUR 6.46 per share, down from EUR 6.74 at the end of Q1 2022. EPRA NRV declined 20% from EUR 8.11 a year ago as an extra dividend of EUR 1.0 was distributed. The Services business accounted for 57% of sales and Real Estate for 43% compared to 54% and 46% a year ago, respectively. Equity ratio remained strong at 55%. Investors House trades at a 16% discount to EPRA NRV and the discount has declined from 25% after the Q1 report. The company has a very strong cash position following recent Real Estate divestments and is patiently waiting for new investment opportunities. We expect a slightly negative share price reaction on Investors House’s Q2 report.