Oddo BHF more cautious on Nexity’s 2022 year, sharpest drop in SRD

Nexity posted one of the biggest drops this Wednesday in the flagship values ​​of the SRD of the Paris Stock Exchange. At midday, the action of the real estate developer lost 4%, to 39 euros, and the title only nibbled away 2% over one year and even lost 15% over five years.

And 2022 does not promise to be a flagship year for the group either. This is at least the opinion of Oddo BHF, which also downgrades the title to “neutral”, against “outperformance” previously, with a price target revised downwards, from 51 to 46 euros. If the fundamentals are considered excellent, growth will probably be more limited this year and the debt is expected to rise, according to the analysis office.

Good resistance

The sector has certainly been characterized for two years by a drop in the allocation of building permits for new housing in France, notes the firm, which continues to weigh on the commercial offer. However, ” Nexity demonstrated good resilience with a limited decline in reservations over nine months (-3.3%) and initial encouraging signals for the third quarter (+6% calculated on the new scope, -2% excluding restatement).

In the same way, the environment is characterized by a relatively large increase in construction costs (from 3 to 4%) and wages, but this ” should not disrupt the profitability of promotional activities which are expected to be greater than or equal to 8%. The group intends to offset this negative impact by increasing sales prices. “. Finally, the financial situation is healthy enough for the group to allow itself to seize external growth opportunities for an amount that could reach 300 million euros.

The 2021 objectives should be achieved, estimates Christophe Chaput, in charge of the file at Oddo BHF, i.e. a turnover of more than 4.4 billion euros excluding the contribution of the divested activities, for a current operating profit of more than 360 million.

Operating margin revised to 8.2%

For 2022, “ if we don’t yet have [prévision], we believe that Nexity will benefit from the ramp-up of services activities (medium-term operating margin of 10%; 6.7% in the first half of 2021) while commercial real estate should return to its normative level of 8 %. In the end, we are rebuilding an operating margin in 2022 of 8.2% (8.5% initially estimated) “, calculates the analyst firm.

Oddo BHF is lowering its earnings per share estimate by 4.7% in 2022 and 6.8% in 2023 to take into account the normalization of commercial property margins. The expected increase in debt linked to the taking of strategic positions on land (major projects with local authorities) “mechanically reduces our target price to 46 euros against 51 euros, i.e. a potential increase of 12%”, concludes Mr. Chaput, i.e. a more reduced potential which no longer makes it possible to “outperform” the indices in the short term, ” without calling into question the strengths of the group.


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