Companies: EEE   

A healthy set of figures from Central and Eastern European property developer Engel East Europe proves its capabilities and a whopping €1.2bn (£817m) sales pipeline provides an indication of its voracious ambition.

The company is focused on residential properties and was established in 2000 as a subsidiary of Israeli property developer Engel Group, whose founder Joseph Engel is chairman and major shareholder of this venture. The company focuses on the Czech Republic, Hungary, Poland, Bulgaria, Serbia and Romania. Since floating on AIM last December with 10,000 units the group has secured nine new sites and, says finance director Nir Netzer, has ‘at least 1,000’ residential units in each of its territories, apart from pricey Serbia.

Of recent deals signed Netzer is excited about one in particular, saying it’s ‘a lot better than the rest of the market is getting’. Heitman – one of the biggest real estate fund manager in the US, if not the world, with $14bn (£7.7 bn) assets under management – is pouring €22.4m into a second joint venture with Engel.

House broker KBC Peel Hunt says such joint ventures, which provide up-front cash, helps Engel expand ‘on a hugely cash efficient basis’. Management claim sales prices in much of Central and Eastern European have increased recently and are confident that their ‘scope of activity will increase substantially in the near future’.

Interim results to June showed net assets increasing 25% to €54.5m and net cash of €36m. Profit before tax of €12.1 was up from €1.8m on revenues up 147% to €23.2m. The company will pay a €0.021 interim dividend too.

Previous earnings forecasts put the shares on a forward p/e of 11.1, but KBC has upgraded its pre-tax profit forecasts 21% to €19m for the full year. When earnings numbers are clarified the shares are likely to be on a p/e under 10. Buy.