Saturday, May 7, 2016

Analysis of Vonovia 2016


Vonovia, a German residential property company

Company: Vonovia (new on DAX since 2015)

ISIN DE000A1ML7J1 | WKN A1ML7J

Business: A German residential property owner. They currently hold over 360,000 residential units in what they claim to be the highly attractive German market. They are currently the largest listed residential company in Europe and it was due to a merger between Deutsche Annington and GAGFAH.

Active: Germany

P/E: 14.8


Here you can find the previous analysis of Gagfah. (one of the companies that merged which I had previously taken a look at)

contrarian values of P/E, P/B, ROE as well as dividend for Vonovia

The P/E of Vonovia is pretty ok with 14.8 and the P/B is very good with only 1.2 which then gives us a buy signal from Graham. The earnings to sales are crazy (unnatural?) good with 26% and the ROE is very bad with 7.8%. The book to debt ratio I find to be ok with 0.6.
In the last five years they have shown an outstanding yearly growth rate of 20.3% which comes from the merger last year but besides from that their growth rate has not been more than around 4 to 5% which would then leave us with a motivated P/E of 12 to 15 which means that Vonovia is today fairly valued by the market.
They Pay an ok dividend in the size of 3.2% which correspond to almost 50% of their earnings which I find fully acceptable.

Conclusion: Graham says yes to Vonovia and I do not. Yes, it is fairly valued today by the market and they do pay out a nice dividend but I do not like it. I would like to buy residential companies when prices for properties are low (when bubbles explode) and not when they must be considered to be fairly high as I would claim them to be here in Germany today.

If this analysis is outdated then you can request a new one.

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