Weak demand: Hypoport share -44 percent: Hypoport suspends annual targets | news

The earlier outlook was “clearly missed”, the SDAX-listed company surprisingly announced on Thursday after the close of the stock exchange in Berlin. It is difficult for the Governing Council to predict whether consumers will remain cautious about private real estate financing or whether the situation will improve again during the year.

For the second half of the year, Hypoport management sees “very weak demand” for products in private and institutional real estate financing and in the corporate finance sector. The reason for this is the hesitant behavior of customers due to the sharp rise in interest rates, extreme inflation and fears of a recession, according to Hypoport. Despite a sharp increase in the housing supply and a slight fall in prices, consumers remained cautious.

Management expects declining revenues for the third quarter. This should be slightly below last year’s level. Earnings before interest and taxes (EBIT) must be “balanced”. Marius Fuhrberg of Warburg Research was surprised because he had expected declining sales but not such a drastic impact on operating profit in the third quarter. However, he positioned himself more optimistically than his colleague and expects the German real estate market to recover. Larger price falls would provide an entry point for investors with a long-term perspective.

At the beginning of August, Hypoport maintained its annual targets, despite the sharp rise in interest on real estate loans and the expected turnover of 500 to 540 million euros and an operating profit (EBIT) of 51 to 58 million euros for 2022. In 2021 the company had a turnover of 446.3 million euros and an operating result of 47.7 million euros.

Hypoport Shares Drop to Lowest Level Since 2017 – Abandoned Prediction

The already ravaged Hypoport investors pulled the emergency brake on Friday after the financial services company suspended their annual targets. Shares, which have been under pressure for months, fell by more than 39 percent in the morning. Most recently, the minus via XETRA was 44.27 percent, while the shares were quoted at 81.75 euros. At the interim peak about a year ago, the price was still 612 euros – since then about 85 percent of the value has been “burned”.

Analyst Simon Keller of investment bank Hauck Aufhäuser spoke of a “devastating profit warning” and issued a sell recommendation for the newspaper. With the new price target of 70 euros, he sees further losses coming.

The financial service provider, which earns its money from mortgages, among other things, is increasingly faced with headwinds from rising interest rates on all sides. Because this makes borrowing more expensive, which means that many consumers will probably take out less and less money on credit in the future. Hypoport therefore admitted Thursday night after the trading day that the previous year’s targets were “clearly missed”. So the group cashed in on its prognosis.

The shock to investors is all the greater as the company, listed on the SDAX, confirmed its targets at the beginning of August despite the sharp rise in interest rates on real estate loans. Meanwhile, however, central banks around the world have continued to cut interest rates, in some cases massively, and it is becoming clear that most monetary watchdogs are leaving their mark in the face of high inflation. monetary policy will tighten further.

According to analyst Keller, this mainly affects the mortgage market. Instead of the originally expected recovery in Germany, the decline in the mortgage market there accelerated in August and also in September so far. The industry expert reckons the worst is yet to come.

Looking at Hypoport, he only believes in sales growth of four percent this year. That’s a long way from what the company originally planned for 2022 — as the original plan was to increase sales by up to a fifth. For 2023, Keller even assumes a decrease in turnover of twelve percent.

Marius Fuhrberg of Warburg was also negatively surprised, especially because Hypoport only predicts a balanced operating result for the third quarter. The analyst described this as “weak,” falling sales had an unexpectedly strong effect on earnings. However, he believes that the change in cost base at Hypoport in the last quarter should lead to positive profit contributions again. However, Fuhrberg sees the weakness in the price as a good opportunity to invest in the stock, as Hypoport should benefit disproportionately from a recovery in the property market. He therefore maintained his buy recommendation and his new price target of EUR 325 is still well above the current share price.

/tav/ag/stk

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