Ipopema Securities recommends BUY for Impact Developer & Contractor. Upside 36% as of today

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Polish broker Ipopema Securities sees a 36% upside for Impact shares (Impact Developer & Contractor) after releasing financial results for the last quarter of 2022.

The company reported its 3Q22 results which were mixed: net income was RON 1.0mn (-90% y/y and -87% q/q), 61% below estimates while revenue from real estate inventories reached RON 66.0mn, (+62.6% y/y and +25% q/q), with 24% above estimates, Impact continues to be well positioned in a growing sector.

For 9M22 the group’s net profit reached RON 14.9mn (+99% y/y) while revenue was RON 156.2mn (+42.7% y/y) as Impact sold 173 apartments with a total value of RON 129.4mn, a 19% increase compared with the same period of the previous year.

As of 30 of Sep 2022, Impact contracted 516 “pre-sales” of apartments, with a total value of RON 272.8mn. Those pre-sales will generate revenues in the next period.

Outlook: Beginning pre-sales for next projects phases with building permits (total volume of 899 units) estimated to begin construction in 2023-2024.

Closing sales and recognising revenue for 195 apartments for Luxuria Expozitiei and completed phases of Greenfield Baneasa (98 units – Panoramic) and Boreal Plus (16 units).

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Impact plans the completion of 732 apartments in Greenfield Baneasa and 209 apartments in Boreal Plus (sales are estimated to start in 4Q22). The group intends to obtain building permits and begin the works for additional phases in Greenfield Baneasa and Greenfield Copou.

Impact intends to obtain financing for its ongoing projects, through a share capital increase of up to EUR 25mn, with focus on Bucharest metropolitan area, the best performing region of the country and also expanding in the country-side.

Bucharest’s metropolitan area economy is growing, and generates 26% of Romania’s GDP. Impact focuses on the development of large residential complexes, both for the middle- and high-income segment.

Per management, these housing concepts will be replicated in other major cities in Romania, due to the fact that it has the highest overcrowding ratio of the EU-28 countries therefore the demand for residential should continue.

The average number of rooms per capita ranged from a high of 2.2 in Belgium, down to 1.1 rooms per person in Croatia, with the lowest average recorded in Romania (1.0 room per person).