Company Report-RGYAS (PhillipCapital)

We initiate our research coverage on Rönesans Real Estate Investment (RGYAS) with a 78% upside potential, a target price of TRY 230.00 per share and outperform recommendation. We use a valuation methodology based on the Net Asset Value (NAV) approach, which we determine after valuing the real estate using the DCF method. This dual-layered framework allows us to capture both the asset-based “floor valuation” and the market[1]implied coefficients that are sensitive to macroeconomic dynamics, thereby achieving a balanced view between intrinsic value and prevailing market sentiment over the short to medium term.

With a gross leasable area of approximately 742,000 sqm (650,000 sqm shopping center, 92,000 sqm office) and prime locations spread across eight cities, the portfolio reached a historic high of 98.7% occupancy in the last financial period; the "fixed + revenue" structure of contracts offers a strong revenue shield against inflation and FX volatility. Operating cash flow remained at TL 12 billion in 2024, comfortably covering debt service; net debt/equity ratio down to 0.37x, significantly reducing financing risk.

The stock, trading at 0.37x MCAP/NAV, is trading at only one[1]third of the portfolio's net asset value; we expect this discount pressure to gradually disappear under a scenario of interest rate and CDS normalization. Our NAV calculation arrives at an equity value of 101 billion TL by subtracting net debt from the gross portfolio of 16 assets and projects; when we multiply this by the appropriate 0.75x multiple, we arrive at an equity value of 76 billion TL. Thus, our target price per share reaches 230.00 TRY.

Major risk factors, i. Possible delays in the portfolio transformation and development schedule, ii. The high-interest rate environment increases the cost of debt rollover, putting pressure on cash flow, iii. A possible increase in the legal ceiling or withholding tax on commercial rents may limit the rate of rent growth iv. A stronger-than-expected weakening in shopping center visitor traffic as e-commerce penetration continues to rise, negatively impacting revenue-based rental revenues


 PhillipCapital Menkul Değerler A.Ş.
  
 https://www.phillipcapital.com.tr/
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