IGD’s stock price up more than 40% since the beginning of the year
Since year-end 2016 to the close on 6 November 2017 the price of IGD’s stock has risen 42.0%, outperforming both the Italian index (+21.5%) and the European real estate sector index (+5%). The stock continues to benefit from the company’s solid fundamentals, which were confirmed in the results at 30 September 2017, and was also positively impacted by the improved global market conditions, as well as the lower yields for Eurozone government bonds which affected peripheral countries, like Italy, in particular. IGD’s positive trend was also boosted by the expectation, which gained momentum in October, that the investment universe of the Piani Individuali di Risparmio or PIR might be expanded to include the real estate sector. If the proposed amendment to the current regulations is included in the next Stability Act, this could provide a new, additional source of demand for the sector’s listed companies.
Source: Italian Stock Exchange and EPRA data compiled by IGD
Thanks to the upward trend that began at the end of June 2017, IGD’s price has reached levels not seen since June 2014, reaching a high for the year of €1.043 on 2 November.
In the second part of 2017, the performance of IGD’s stock was more in line with the Italian stock market index than with the FTSE EPRA NAREIT Developed Europe index. While the performance of the European real estate sector was slowed by the concerns about the repercussions of higher interest rates going forward and strongly influenced by the difficulties of a few big UK players, in light of Brexit, IGD benefitted from a number of factors which supported the stock. In addition to the good fundamentals, confirmed by the results at 30 September 2017 published on 9 November, the stock also benefitted from the continuous improvement in the estimates for economic growth in Italy and the increased confidence in the ability of the banking system to address and resolve the NPL issue.
Beginning in October 2017, IGD’s stock rally accelerated. In addition to the drop in bond yields, thanks to the ECB’s stance which will continue to be accommodating until convincing signals of economic recovery materialize, what gave more luster to the stock’s performance was the expectation that listed Italian real estate companies might be included in the investment universe of the Piani Individuali di Risparmio or PIR which, thanks to tax incentives, are attracting significant flows.
The prospect of the investments which could be generated by these vehicles, with benefits also in terms of increased liquidity, immediately caused the price of IGD’s stock to rise. The gap between the price and the consensus target price of the seven brokers covering the stock (€1.03 at 6 November 2017) was, therefore, closed quickly.
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