FFA prices Solidere at $17
Good long term prospects, caution on the short-run
FFA Private Bank reiterated its target price for Solidere shares at $17. The current price is at a discount of more than thirty percent to the fair value estimate, as the current price for Solidere stock is around $12. The Price-to-Book (P/B) is 1.3 times based on FFA 2014 estimated Book Value of Equity per Share (BVPS).
FFA maintained an overweight recommendation recognizing value for long term investors despite remaining cautious in the shorter term against an uncertain political and economic backdrop impacting the property market and investor sentiment. Upside risks include a smooth presidential elections process and favorable outcome to Syrian crisis, the bank said.
The report also highlighted key investment risks, mainly the cyclical nature of the real estate sector and high sensitivity to macroeconomic conditions, Solidere’s business model based on a finite land bank, and its dependence on land sales.
FFA expected Solidere to see improved financial results in 2013 compared to 2012, as the company may have seen the bottom in profits in 2012 when net profits dropped to $17 million or about ten percent of the previous year’s results.
For 2013, FFA estimated Solidere to approximately triple 2012 net profits to an estimated $55 million and Earnings Per Share (EPS) of $0.34 on total revenues of $175 million.
Reported by Leila Rahbani
Date Posted: Apr 25, 2014