Deutsche Bank Initiates Coverage of Neinor Homes with Buy Rating

Per today’s report:

« Floated in early 2017, Neinor is the second largest Spanish homebuilder, focusing on first time buyers in the medium to medium-high price range. The group will ramp up production on its E1.5bn (12k unit) landbank bought early in the cycle on 20% EBIT margin and 15% ROCE. However we expect Neinor to complete future land acquisitions at 15% EBIT margin. DBe a 10% 2020 FCF/sales at steady-state which, based on a 100% pay-out, drives a 2021 div yield of 11%. Neinor may choose to funnel cash back into the land bank to drive further earnings growth above mgmt and consensus run-rate forecasts. Trading on 1.3x 2020 P/NTAV, we believe this yield/growth opportunity leveraged to the early stages of recovery in the Spanish housing market, remains underestimated and initiate with a BUY. »