Rental revenues continue their rise, debt reduced
Q2 2024 results
30 July 2024
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- Revenues from renting and managing properties have risen 30.4% to BGN 5.1mln. The period captures the increase in tenants for the newly available office space in Synergy Tower, as well as the rebound in the Business Park location when several tenants left at the end of 2022/beginning of 2023, but the available office space was soon lent out.
- The work to fully complete the office space in Synergy Tower continues
- Operating Expenses marked a slight decline of 6.4% YoY to BGN 2.3mln. This was possible due to changes in Value of Assets sold (BGN 0.329mln difference) and Other expenses (BGN 0.311mln difference).
- In the past year, total expenses decreased by 2.5% compared to the previous reporting period. The major driver was the abovementioned changes in Value of Assets Sold and Other expenses. Expenses associated to maintenance and repair of office areas increased 36% to nearly BGN 1.5mln in line with the greater amount of office space lent out. The account is expected to increase in the future as more contracts are signed, but that will be a proportionate increase.
- Expenses to the servicing company increased 14% to BGN 0.667mln as a result of the increased assets under management. Interest expense also increased 21.6% to BGN 0.49mln due to the increase in the interest of their loans to Eurobank by 0.9% in Q3 2023. Total exposure as of the end of Q2 is BGN 28.8mln.
- Net profit was BGN 2.4mln, reflecting a 65.1% increase compared to the previous year. The increase in rent and property management revenue played a major role here.
- Total assets grew YoY by 10.8%, while net debt decreased by 16.4%. Simultaneously, the company reduced its long-term debt significantly. The drop YoY was 20%, or BGN 5.8mln to reach BGN 23.8mln. In the same time, the decline in the last 6 months was 8.9%, or BGN 2.34mln.
- The decline in cash from BGN 10.3mln to BGN 3.6mln is explained by the continuing finishing works on the Synergy Tower project. The company expects that cash will be used further in the following trimesters for the same purpose and cash reserves will be further decreased.
Notable events:
- MSG Global Solutions Bulgaria – a 5 year agreement for 662.31 sqm at their Synergy Tower location. With that, total occupancy there stands at 55.79%.
- “Koderi” AD – a 5 year agreement for 273 sqm in Synergy Tower.
- C3I Europe EOOD – extended agreement for 1,545 sqm in Business Park Sofia till 31.10.2025.
- British Council – a 5 year agreement for 338.24 sqm in Business Park Sofia.
- Business Park Sofia occupancy reached 75.67%.
Ivaylo Valchev
Equity Analyst
Tel.: +359 2 937 9862
e-mail: valchev@sis.bg
Svetozar Abrashev
Senior Managing Partner
Tel.: +359 2 937 9869
e-mail: abrashev@sis.bg
Sofia International Securities
Sofia 1000,
140 G. S. Rakovski Str.
Tel.: + 359 2 937 98 65
e-mail: info@sis.bg
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Sofia International Securities AD is a member of Bulgarian Stock Exchange (BSE) and the Central Depository of Bulgaria. The company provides brokerage, investment banking, equity research, portfolio management and other services. Sofia International Securities AD is regulated by the Financial Supervision Commission of Bulgaria.
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Equity Valuation and Risks
The value estimate(s) stated in this report is (are) valid only in light of the valuation methods used to derive this estimation. The use of other or more comprehensive approaches could result in other estimates of value that could diverge substantially from the results presented herein. With regard to the above, when making our conclusions about the intrinsic value of the Company’s share capital, we have not considered or evaluated any possible tax, legal or other effects that might arise from engaging in transaction(s) with the shares of the company. The document should not be regarded by recipients as a substitute for the exercise of their own independent judgment and they should seek and obtain independent investment advice is necessary. Any facts and/or information stated in this document are subject to change without notice and Sofia International Securities is not under any obligation to update or keep current the information contained herein. Any opinions expressed herein are only correct as of the stated date. Past performance is not indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security.
General
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