On Tuesday, May 12, an investor chat was held with representatives of the Management Board of GK Immobile - Rafał Jerzy, chairman of the board, Sławomir Winiecki, vice-president of the board and Piotr Fortuna, a member of the board. During the discussion, we talked about the company's financial results for 2019. Investors also asked questions about the impact of the COVID-19 pandemic on the company's operations, dividend policy, real estate and hotel market situation. Almost 560 investors took part in the discussion, and the company's management board answered over 30 questions. We invite you to read the entire account.
[box] Welcome to the investor chat of the IMMOBILE Capital Group and we encourage you to ask questions.[/box]
[box] What about subsequent acquisitions, did the crisis situation lead you to find any opportunities?
Currently, one of the industries most affected by the pandemic is the tourism industry, we are patiently waiting for bargains. [/box]
[box] What does the issue of talks with tenants of office space at Immobile K3 look like?
All our tenants' businesses have not been significantly affected by the pandemic, except for the restaurant we work with to reduce the effects of the pandemic.[/box]
[box] As a GK Immobile Shareholder, I would like to know the results of "my" company as soon as possible after the end of the settlement period. Could the Management Board explain why the annual report is published over 4 months after the end of the year?
The delay is due to two factors. The first is the first annual consolidation of Atrem, while the second is the impact of the pandemic on external entities cooperating with the report. [/box]
[box] Will the economic situation affect the company's activities in the development sector - e.g. lowering the finishing standard of subsequent stages of Platanowy Park or starting the investment on the Black Road?
We have no plans to lower the standards. In the event of major pandemic effects in this segment, we will be more cautious when starting the next stages. We are in the process of obtaining a building permit for the Czarna Droga investment. [/box]
[box] Will the economic situation affect future plans for the hotel segment?
The hotel market in the current situation is the most interesting in terms of potential market acquisitions, however, we must focus our attention only on hotels with a specific specificity.[/box]
[box] Can plans regarding office space in Platanowy Park change?
We do not anticipate changes for the time being, we are awaiting the construction of clients who will commit to renting large areas.[/box]
[box] What about the dividend this year? For security reasons, will you want to keep more money in the company?
Currently, the pandemic situation is very dynamic. We intend to issue recommendations before the ordinary general meeting.[/box]
[box] How do you assess the decline in the share price? There is probably no such justification in the foundations for such a large decrease?
We think the price is low, as shown by the announced purchase.[/box]
[box] How do you gentlemen now relate to housing prices? Do you have any data on how many flats were bought for investment purposes / short-term rental?
For now, we do not see a drop in production prices, so we do not expect large changes in sales prices. We are in a situation where we have one advanced investment 99% and the other 70% on the cost side, which means that there are no significant risks of losing margins.[/box]
[box] Are you thinking about slowing down development investments or are you not seeing such a need at the moment?
In our business, it is a segment that on average gives us revenues of less than 7% of our total revenues. We operate on our own land, which has belonged to us for years, so we can be flexible in making decisions about the pace of implementation.[/box]
[box] And I repeat the question that I once asked, because it was mentioned: What about the Focus Hotels development plans, will the company debut on the WSE?
Falling prices and low turnover demotivate us to think about the debut. We will wait until the shareholders return to the market.[/box]
[box] How are the changes in Atrem? It's been a year since the finalization, how did it go by?
Atrem currently works according to the GKI model, in a way that does not differ from other Group companies. Now we have to be patient because we know that this model has historically been profitable. [/box]
[box] Question about the hotel segment: how much will it suffer from coronavirus restrictions? What savings have you made?
We have dramatically reduced costs, which allows us to minimize losses with returning customers.[/box]
[box] Is the Management Board satisfied with the market maker services for all companies in the Group?
The board did not make free choice over the animator. We fell into a liquidity support program that forced us to cooperate. However, we are convinced that the animator acts in accordance with the applicable law, which, as far as we know, limits his freedom of action. In addition, it is an entity closely supervised by the PFSA.[/box]
[box] The group increased the dividend every year, what are your assumptions about the dividend for 2019 at this time?
The answer has already been given in previous questions.[/box]
[box] At what stage of implementation is Focus Hotel Premium Warszawa? When is the company planning to launch the location?
The hotel is currently at the stage of making the reinforced concrete structure of the seventh floor. The investor reports delays, we are in the process of determining the opening date.[/box]
[box] What is the share of hotels in the whole group?
This year it will be about 9% of revenues.[/box]
[box] What decline have you seen in the hotel segment and is it slowly coming back to normal?
It was a decrease of around 95% in April. We believe that the government's restrictions still block the return of guests to our hotels.[/box]
[box] What formulas of the General Meeting of Shareholders does the Management Board envisage this year due to a pandemic?
We will announce the formula in the announcement, and we will try to always enable the active participation of as many shareholders as possible. This is one of the few things management can do for a potential rise in share prices. [/box]
[box] Is the sale of Faktoria already "closed"? Cash on group accounts?
96% of the cash was on the account on the day of the transaction, the remainder will be within a month.[/box]
[box] Which segment feels the pandemic the most and which can benefit from the current situation?
The hotel segment was the most affected and of course, we believe that this segment may also benefit the most in a 'pandemic' situation.[/box]
[box] Is it worth starting new investments? Or maybe it's better to hold back what you can and look for opportunities to take over something at a low price?
We believe that the acquisition is an investment, the same as investment, e.g. real estate. The current situation may create opportunities for acquisitions, as demonstrated by companies losing the valuation of their shares as a result of a sell-off by shareholders. [/box]
[box] Good morning, gentlemen. Question regarding the purchase of shares announced today. More for redemption or for resale?
At the moment, we tend to buy in for resale, at prices that reflect the company's value.[/box]
[box] Further on the purchase of shares announced today. If for redemption, can we afford it? Of course, I agree with the statement that it is cheap to buy. However, times are hard.
The overall situation requires flexibility, so the answer to this question can be very variable over time. There are large positive cash events ahead of us, such as the sale of flats, which sufficiently allow us to look optimistically at our cash situation, especially in Q3 and Q4. [/box]
[box] Can you develop a thought from the Management Board Letter to Shareholders: "we are working on taking advantage of the opportunities that the current situation on the hotel market gives us"
We discussed this in previous questions, and the development is rents, leases, acquisitions. [/box]
[box] What is the current lease of space in K-3?
Agreements that we finalize by the end of May will cause that the area available for rent will be lower than 10% of the total area of the lease.[/box]
[box] The revenues of the Immobile capital group for 2019 amounted to PLN 418.86 million, which means an increase of over 20% y / y, but looking at the net profit, no such satisfaction can be seen - or rather it was not a crisis year. Of course, cyclicality in construction and the acquisition of ATREM has an impact on this. Can the Management Board's expectation of a significant increase in revenues be / should we equate with a potential increase in profit (increase in the share price)?
In companies that have been with us longer, this growth is organic, and in the case of Atrem, this growth will result from the consolidation of revenues for the whole year. We don't see a significant increase in costs and it all depends on the results of hotels or government decisions.[/box]
[box] In what sense is the hotel segment an opportunity now? It may take a year before it returns to normal in this segment?
However, the entire thinking of the Group and some of its shareholders is focused on long-term strategies that go well beyond the perspective of one year. As far as we know, hotel operations were already known at the time of Christ's birth and we do not think that this will change significantly during our lives.[/box]
[box] Modulo car parkings - will the segment be a plus this year? What are the orders - for what period of production is secured?
We invite you to the PROJPRZEM MAKRUM blog, where you can find a chat transcript from the company's results - Modulo issues were widely discussed there. www.blog.projprzem.com [/box]
[box] What funds were available to the company at the end of the quarter? Did it change significantly in April-May?
The funds available in the IMMOBILE Group, due to the specifics of the contracts and the transaction on Faktoria, are increasing compared to those you see in the report for 2019.[/box]
[box] Atrem - you wrote in the report that you were surprised by the low profitability of implemented contracts - what impact can this have on 2020?
Atrem's management already controls profitability on all contracts, and all known potential losses were concluded to the best of our knowledge as a result of 2019. Therefore, if any influence appears, we assume that it will be trace.[/box]
[box] Is the increase in online commerce conducive to the acquisition of further orders in Reloading Systems?
We are optimistic about the increase in orders, for now the problems we see are associated with difficult assembly, especially outside the country.[/box]
[box] What do you think about negative comments on the Bankier.pl forum?
We understand the frustration, both caused by the pandemic and the situation on the Polish stock exchange. We believe that those who conduct a lively conversation expect the board of GKI to at least break the law and influence the price of shares by board members. Of course, we remain invariably grateful to all those who are our positive supporters on the road to building a free market and capitalism in Poland. As always, we are open to constructive polemics, especially with people whose nicknames do not hide their true identity.[/box]
[box] Thank you very much for your interest in chat and numerous questions. We also encourage you to visit our blog and subscribe to the company's newsletter: http://blog.immobile.com.pl[/box]