KMC Properties ASA, a real estate company, owns and operates industrial and logistics properties. It owns a portfolio of 44 properties in the Nordics and the Netherlands, as well as an office building in Moscow, Russia. The company was incorporated in 2020 and is headquartered in Trondheim, Norway.

Norway

KMC Properties ASA

Real Estate

The company pays dividends irregularly. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. 

KMCP.OL reported revenue of NOK 238mn in the last 12 months, down 42% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach NOK 0.00 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 90ppts over six months and grown 6ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is slightly negative.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 60.9% in the last 12 months, up from 50.7% in FY23. 

Historically, KMCP.OL has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 6.1%, a growth from -19.0% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 0.4% in the last 12 months, an increase from -1.3% in FY23. The market analysts predict that RoA will be -1.6% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 0.4%, below the peers. The consensus estimate for FY24 for RoCE is 4.7%, again behind the peers. 

KMC Properties ASA reported a return on equity (RoE) of 0.9% in the last 12 months, up from -3.0% in FY23. The market consensus projects an RoE of -3.9% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.2 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

KMCP.OL has very poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and is somewhat unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, excessive margin volatility, weak debt servicing capacity, and inadequate interest coverage. We note resilient historical revenue growth and robust profitability, among the positive credit factors. 

In highly turbulent market conditions, KMCP.OL is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, KMCP.OL is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

From both historical and forecast perspectives, the stock is underpriced compared to similar stocks. In particular, the stock is reasonably priced on P/E, 'cheap' on EV/EBITDA, undervalued on P/FCF. 

KMC Properties ASA

NOK 0.07

3

KMC Properties ASA

NOK 0.07

3

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NOK 0.07

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