Analyzing Nexity's 2023 results and outlook, Oddo BHF confirms its 'neutral' rating on the stock, but reduces its target price from €15 to €12.
In 2023, RO came to 246 ME, down 33%, mainly due to a lower contribution from residential property (ROC 140 ME; -50%; MOP 4.8% vs. 8.3%) as a result of higher construction costs, a less favorable customer mix and lower amortization of fixed costs", justifies the broker.
Oddo BHF adds that profitability in the residential property sector is likely to continue to erode in an unfavorable environment.
The analyst therefore considers the current environment to be 'unquestionably very complicated', with a further decline in profitability forecast for 2024.
As a result, Oddo BHF is revising downwards its estimate of ROC by 30%, and believes that while FCF is likely to be loss-making, 'the disposal of the property administration business (and even the distribution business), will provide financial flexibility to adapt to new market conditions'.
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A leading integrated player in French real estate, Nexity covers the full range of real estate sales and services offered to individuals, businesses, institutional investors, and local communities, accompanying them throughout the real estate process. Net sales break down by activity as follows:
- sale of new homes (68.9%). The group is also involved in building land allotment and urban regeneration activities (Villes & Projets);
- real estate management services (20.4%): residential property management, student residence management, consulting and real estate transaction services (for individuals, businesses, and investors), network marketing of real estate leasing investment products, management, promotion, and development of real estate franchise networks, etc.;
primarily activities related to urban renewal (Cities & Projects);
- sale of commercial real estate properties (10.7%): sales of office buildings, skyscrapers, commercial complexes, logistics platforms, businesses and hotels.
France accounts for 98.6% of net sales.