In Q3 2023, Equinox recorded revenue growth of 1% YoY, an EBITDA increase of 12%, and a net income of EUR 802k, an increase of 168% YoY.
Starting off with the macroeconomic environment, the Company noted that several trends happening: firstly, there has been a cooling of economic activity. The inflation rate is still high, and as such a longer period of higher interest rates could be expected. Financing conditions continue to tighten, as the higher interest rates directly translate into higher financing costs, for companies and households alike. On the other hand, commercial banks also started to increase deposit interest rates, which somewhat offsets the growth in the loan interest rate, albeit to a much lesser degree as the spread between loan and deposit rates is still quite high. All taken together, this has led to a fall in real estate transactions, which affected Equinox.
For the Q3 2023 highlights, the variable rent contracts, signed with several companies for several different real estate (mostly commercial) have had their variable part of rent paid for the first time. Equinox also signed first contracts for renovations of the 3rd and 4th floors of the Grand Hotel Union. Also, the Company signed a contract for the purchase of five apartments, with the price of EUR 1.2k per sqm. Lastly, the renovation of the additional business premises in the Delo high-rise building for the existing tenant continues.
Moving on to the financials, in Q3 2023, the Company recorded net revenue of EUR 2.04m, representing an increase of 1% YoY. This came as a result of higher rent income, which grew by 2% YoY to EUR 1.9m, while income from the sale of products and services decreased by 11%, to EUR 142k. In terms of expenses, the cost of goods, materials, and services amounted to EUR 355.6k, which is a decrease of 30% YoY. This came due to a decrease in both the cost of services (-35% YoY, to EUR 227.4k), as well as the cost of consumables and energy (-19% YoY, to EUR 128.2k).
Due to the reduction in costs while the revenue remained roughly the same, the EBITDA amounted to EUR 1.62m, an increase of 12% YoY. This would also mean that the EBITDA margin amounted to 79.5%, an increase of 7.7 p.p. YoY. Besides real estate, Equinox as a company also invests in different asset classes, including stocks and bonds. This brought the Company significant financial income in Q3, as the financial income from shares amounted to EUR 84.1k (Q3 2022: EUR -287.8k). On the other hand, financial expenses increased by 20% YoY to EUR 107.5k. All taken together, this resulted in a net income of EUR 802k, representing an increase of 168% YoY, and implying a net income margin of 39.3%, an increase of 24.5 p.p. YoY. One other indicator that is worth mentioning in the real estate business is the so-called funds from operations, FFO. This is calculated as a company’s net profit to which depreciation is added, as well as the one-off effects. This amounted to EUR 1.62m, an increase of 19% YoY.
Equinox key financial indicators (Q3 2023 vs. Q3 2022, EUR ‘000)
Source: Equinox, InterCapital Research
As compared to the SBITOP index, Equinox recorded a 3% increase YTD, while the SBITOP index grew by 12% YTD.
Equinox, SBITOP share price performance (2023 YTD, %)
Source: Bloomberg, InterCapital Research
In September, passenger car registration in the EU increased by 9.2% YoY, totaling 861,062 units. Meanwhile, looking at the first eight months of 2023, EU registration of new cars increased by 16.9% YoY overall. In Croatia in the mentioned period, passenger car registration reported an increase of 32.3% YoY.
New total car registration per month
Source: ACEA, InterCapital Research
In September 2023, passenger car registration in the EU increased by 16.9% YoY, totaling 861,062 units. The largest increase reported in the EU in September was in Italy, where the absolute increase amounted to 25.4k units, representing an increase of as much as 22.7% YoY increase. Italy is followed by France at 15.2k units (10.7% YoY). Next up is Belgium where the increase was 7.9k (25.4% YoY). Finally, there are remaining major regions within the EU, those being Germany and Spain. Spain reported the least pronounced growth of 1.6k units (+2.3% YoY), while the growth trend in Germany from months before was stalled. Looking at the majority of months before, Germany reported the most pronounced growth. However, during September, Germany noted a flat development with a 0.1% YoY decline during the month.
When observing the first nine months of 2023, the situation is pretty similar – EU registration of new cars increased by 16.9% YoY. However, the previous year was influenced by the semiconductor shortage, which started all the way back in 2021. Consequently, most EU markets showed strong growth compared to previous years. When observing the whole period, each of the major markets within the EU noted a positive development. Germany reported the most pronounced absolute growth (amounting to a relative 14.5% YoY), while the remaining major markets, Italy, France, and Spain follow Germany all noting a strong double-digit growth of 20.5%, 15.9%, and 18.5% respectively, coming both from low base effect & real recovery in the sector. Smaller regions mostly noted double-digit growth. In September, a few smaller countries reported a YoY decrease in units.
Looking at the region, when observing the whole YTD period, Croatia reported an astounding increase of 32.3% YTD, amounting to a growth of 11.5k units. Slovenia reported lower numbers, recording a 4.4% growth, amounting to 1.6k units.
New car registration by power source
Source: ACEA, InterCapital Research
During September, EU battery-electric car registrations increased by 14.3%, reaching 127,149 units, or 14.8% of the market. New EU hybrid-electric car registrations increased by 30.5%, primarily driven by robust growth in the three largest markets: Germany, Italy and France. In total, the hybrid’s market share increased by as much as 4.4. p.p. YoY in September. Further, new EU plug-in hybrid car registrations were relatively stable. EU petrol car market increased by 5.5%, although its market share decreased from 35.3% to 34.1% YoY due to increased demand for other types. Finally, overall the EU diesel car market continued to decline during the month.
On Friday, Banca Transilvania went ex-date, and as a result, the Company’s shares declined by 4.0%.
The ex-date refers to the approved dividend of RON 1.13, which at the share price before the announcement, would imply a dividend yield of 5.5%. Friday, 20 October 2023, was the Company’s ex-date, while the payment date is due on 6 November 2023. By the day’s closing, as a result of the ex-date, the share price declined by as much as 4.0%.
Below you can see Banca Transilvania’s historical dividends per share and dividend yields.
Banca Transilvania’s historical dividend per share (RON) and dividend yield (%) (2019 – 2023)
Source: Banca Transilvania, InterCapital Research
Here you can find the dates for the upcoming events of the regional companies.
| wdt_ID | Date | Ticker | Announcement | Country |
|---|---|---|---|---|
| 13 | 31.10.2023 | SNP | OMV Petrom Q3 2023 Results, Conference Call | Romania |
| 14 | 31.10.2023 | RIVP | Valamar Riviera Q3 2023 Results | Croatia |
| 15 | 31.10.2023 | HT | Hrvatski Telekom Q3 2023 Results, Conference Call for analysts and investors | Croatia |
| 16 | 31.10.2023 | KOEI | Končar Q3 2023 Results | Croatia |
| 17 | 31.10.2023 | SPAN | Span Q3 2023 Results | Croatia |
Due to the nature of these events, they are subject to change (might be postponed or canceled).