IMMOEAST może kontynuować rajd na wyższe poziomy - BLOOMBERG

World’s Biggest Gainer Immoeast May Extend Its Rally (Update2)
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Jan. 6 (Bloomberg) -- Immoeast AG, the best performer in the MSCI World Index in 2009, may extend gains this year because the Austrian property developer is still valued below its western European competitors based on their assets.

Immoeast is trading at 44 percent less than its net asset value, while shares of Unibail-Rodamco SE and Land Securities Group Plc are priced higher than their NAVs.

The Vienna-based developer rose by more than eight times last year as the company avoided bankruptcy by abandoning building projects and generating cash. Chief Executive Officer Eduard Zehetner needs to make further improvements to attract investors, according to Alex Hodosi, an analyst at UniCredit SpA in the Austrian capital.

There were “real problems a year ago and the steps he has taken have been really successful,” said Hodosi, who recommends investors continue to buy the shares. “The company has to drive costs down and show they can improve cash flow.”

Immoeast and Immofinanz have risen in each of the last six sessions in Vienna. The city’s exchange is closed for a public holiday today.

Merger Plan

Shareholders of Immoeast and Immofinanz AG, which owns most of the shares, will vote this month on a proposed merger of the two developers. Immoeast investors will own 54 percent of the combined company to reflect that Immoeast is Immofinanz’s biggest asset. Zehetner is also CEO of Immofinanz.

Immoeast was hurt by the global financial crisis that caused its properties in eastern Europe to plummet in value. Zehetner, 58, presented a reorganization plan for Immofinanz in February aimed at improving its balance sheet, repaying a 512 million-euro ($737 million) investment in corporate bonds and resolving a 1.8 billion-euro loan from Immoeast.

Immoeast’s share price ended the year at 3.85 euros, after closing at 46 cents at the end of 2008. The performance in 2009 compared with a gain of 27 percent in the MSCI World Index, a stock index that contains 1,656 companies.

Zehetner’s “ultimate goal” is to get the shares trading in line with rivals. Real estate stocks trade near or above the net value of their assets, said Igor Muller, an analyst at Wood & Co. in Prague with a “hold” rating on the stock.

The price on Dec. 31 was 47 percent less than the net asset value at Oct. 31, the end of Immoeast’s fiscal second quarter, which was 7.31 euros a share.

Unibail-Rodamco, Europe’s largest property company, trades at about 18 percent more than the net asset value of 131.70 euros a share at the end of the first half. Land Securities, the U.K.’s largest real-estate investment trust by market value, is 18 percent higher than the net asset value on Sept. 30.

‘Huge Potential’

“There is huge potential upside but they will have to show that corporate governance is improved vastly,” Muller said. “They would probably have to show they can sell assets for prices above book value. Those are the things that would surely push up the price in line with the others.”

Zehetner became Immoeast’s chief in November 2008 and CEO of Immofinanz in February 2009. He previously oversaw the rescue of RHI AG, the world’s biggest maker of fire-proofing ceramics.

As well as cutting back on shopping-mall developments in eastern Europe, Zehetner has refinanced some debt and sold Immofinanz’s Immoaustria Immobilien Anlagen GmbH unit to Immoeast to cancel a loan Immofinanz couldn’t afford to repay.

The 94 percent slump in the share price in 2008 was because of concern that the company might go out of business, according to Gernot Jany, a real estate analyst at Erste Bank AG in Vienna. Jany has an “accumulate” rating on Immoeast.

“The restructuring process is now almost finished,” he said. “They will have to reduce their high retail presence in Russia and also in Romania.”

Immoeast and Immofinanz reported improved results for the second quarter as the value of their properties increased. Immoeast may sell one of its five malls in Moscow and will dispose of some properties in Romania, Zehetner said in September. The company opened Golden Babylon Rostokino, Europe’s largest mall, in Moscow last month.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: January 6, 2010 07:18 EST