The analysis division of the private bank confirms its opinion of “outperformance” on the shares of the real estate company specializing in warehouses.
In a “difficult” economic environment, the “good visibility” of Argan is a criterion for buying on the stock market, according to Oddo BHF | Photo credits: Argan
In an economic environment ” hard “, what to buy on the stock market? The private bank Oddo BHF recommends Argan, a property company specializing in warehouses in France, one of the advantages of which is to display a ” good visibility “. Financial analyst Florent Laroche-Joubert argues that the logistics market in France is “a rarity market that is still well oriented”, where the vacancy rate is just over 4%. The scarcity of supply, which is explained in particular by the fight against the artificialization of soils, “should persist and support the upward pressure on rents (+2.4% per year on class A)”especially since “Demand remains sustained under the effect of several drivers such as the location of warehouses as close as possible to consumption areas, the reorganization of stocks and the ever greater sophistication of warehouses. »
Category A logistics platforms are those which notably offer dock levellers, truck parking and have access that does not cross a built-up area. These are the ones that are rented the most expensive and have a higher yield. The property rents them in particular to brands such as Amazon or Decathlon.
“Its portfolio of 3.75 billion euros is still as qualitative by the identity of its tenants, the average residual duration of its leases (5.9 years) and its 99% occupancy rate”, we explain at Oddo BHF. 60% of Argan’s logistics warehouses are located on the backbone, that is to say on the axis that connects Lille, Paris, Lyon and Marseille.
“Very probable” entry on the EPRA index
Oddo BHF is waiting “an average growth of 6.1% per year in net recurring earnings per share and 7.1% in EPRA NRV per share” over the period 2021-2024. The EPRA NRV revalued net assets per share estimated by the analyst at 112.3 euros (+9.5% over one year) is higher than the target of 107 euros targeted by the company itself.
Analyst Florent Laroche-Joubert has a target price of 120 euros for Argan, which suggests a potential stock market gain of 30%. He is all the more optimistic about value as he sees the company integrating ” very probably “ the FTSE EPRA Index by the end of March 2023.” The liquidity of the Argan share has improved significantly in recent months », he notes, this eligibility criterion is “already filled in the first five months of 2022. The ongoing improvement in financial communication should also allow greater visibility on the equity market. »
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