Valuation of the stock still attractive even after the recent rise

IGD’s stock price has risen 14.5% from year-end 2016 through the close on 5 May 2017, outperforming both the Italian index and, to a more significant degree, the European sector index. Sustained by the good fundamentals that emerged in the 2016 Annual Report, which will make it possible to pay a dividend of 45 euro cents on 22 May, and the growth prospects outlined in the 2016-2018 Business Plan, IGD’s stock was not impacted by the increase in bond yields that generally penalized the real estate sector. The residual upside indicated by the discount at which the stock is trading with respect to the NAVA (36%) and the consensus target price (22%) continue to support the stock’s performance, including after the noticeable increase recorded since the beginning of the year.

Source: Italian Stock Exchange and EPRA data compiled by IGD

IGD’s stock price has risen 14.5% from year-end 2016 through the close on 5 May 2017, versus the rise of 13.2% reported by the Italian index and the much smaller 4.3% increase of the European sector increase.

Since the beginning of February the stock is in a new upswing supported, in terms of factors linked specifically to the Company, by the publication of the results for FY 2016. This rise continued until 28 March when the stock hit its period high of €0.83, an increase of around 20% with respect to the beginning of February. Subsequently, in the first three weeks of April, the stock retraced around one third of the gain recorded in the two previous months, to then rapidly return the high reached at the end of March.

The substantial rise in IGD’s stock price in the first part of 2017 took place at a time when several factors supported equity investments, as is shown, moreover, by the performance of the FTSE Italy All-Share index. The Milan stock market benefitted, first of all, from the ECB’s improved estimates for Euro zone GDP growth in 2017-2018, following the publication of encouraging macroeconomic data; the possibility of an economic recovery gave a particular boost to the prices of bank stocks as a result of the improved loan situation which had a significant impact on the Italian index given the substantial weight of the banking sector in terms of capitalization. The FTSE Italy All-Share index also benefitted from the positive impact of the launch of the individual savings plans (PIR or Piani Individuali di Risparmio), which already in the first months of 2017 drove the prices of small and mid-cap stocks. All these factors also had a positive impact on the performance of IGD’s stock.

As for the sector, the European real estate equities continue to post weak performances. The expectation that a more robust economic recovery will cause the ECB to gradually taper its loose monetary policy caused the yields for Euro zone sovereign debt to rise which generally penalized the valuations of real estate equities. During this phase the correlation between IGD’s stock and the performance of the EPRA/NAREIT Europe index proved to be quite low.

The stock’s good performance was also fueled by the ample discount at which the stock is still trading with respect to its year-end 2016 NAV and the analysts’ average target prices. Based on the closing price recorded on 5 May 2017, €0.829, IGD’s stock is trading at a discount of around 36% compared to the EPRA NNNAV recorded at year-end 2016 of €1.29.

The consensus target price, namely the average target price indicated by the brokers covering IGD, is now €1.01 euro. Despite the stock’s recent rally, at the current price the stock still provides attractive upside of around 22%.

Dividend for FY 2016: € 0.045 per share

Going ex-div	22 May 2017
Record date	23 May 2017
Payable as from	24 May 2017

 

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