Hypoport share -35 percent: Hypoport suspends annual targets

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The previous outlook was “clearly missed”, the SDAX-listed company surprisingly announced on Thursday after the stock exchange closed in Berlin. The Executive Board can hardly predict whether consumers will remain cautious about private real estate financing or whether the situation will improve again as the year progresses.

For the second half of the year, Hypoport’s management sees “very weak demand” for products in private and institutional real estate financing and in the corporate finance business. The reason for this is the hesitant behavior of customers as a result of the sharp rise in interest rates, extreme inflation and fears of recession, Hypoport said. Despite a significant increase in the range of properties on offer and a slight drop in prices, consumers held back.

For the third quarter, the management expects declining revenues. This should be slightly below the previous year’s level. Earnings before interest and taxes (EBIT) should be “balanced”. Marius Fuhrberg from Warburg Research was surprised because he had expected declining sales, but not such a drastic impact on the operating result in the third quarter. However, he positioned himself more optimistically than his colleague and expects that the German real estate market will recover. Larger price setbacks would offer investors with a long-term perspective an entry opportunity.

At the beginning of August, Hypoport stuck to its annual targets despite the significant rise in interest rates on real estate loans and forecast sales of EUR 500 to 540 million and an operating profit (EBIT) of EUR 51 to 58 million for 2022. In 2021, the company had generated revenue of EUR 446.3 million and an operating result of EUR 47.7 million.

Hypoport shares have fallen to their lowest level since 2017 – forecast abandoned

Already plagued Hypoport investors pulled the emergency brake on Friday after the financial service provider suspended their annual targets. The stocks, which have been under pressure for months, fell by a good 39 percent in the morning. Most recently, the minus via XETRA was around 36 percent, which means that the shares were listed at just under 95 euros. At the interim high around a year ago, the price was still 612 euros – around 85 percent of the value has “burned” since then.

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

The financial service provider, who earns his money with mortgage lending, among other things, is increasingly facing the headwind of rising interest rates on all sides. Because this makes loans more expensive, which is why many consumers are likely to withdraw less and less money on credit in the future. Hypoport therefore admitted after the trading day on Thursday evening that the previous year’s targets were “clearly missed”. The group therefore cashed in on its forecast.

The shock to investors is all the greater since the company, which is listed on the SDAX, had confirmed its goals at the beginning of August despite the significant rise in interest rates on real estate loans. In the meantime, however, the central banks around the world have continued to tighten interest rates, in some cases massively, and it is becoming apparent that most monetary watchdogs are making their mark in view of the high inflation monetary policy will tighten further.

According to analyst Keller, this is hitting the mortgage market particularly hard. Instead of the originally expected recovery in Germany, the decline in the mortgage market there accelerated in August and also in September to date. The industry expert assumes that 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 had originally planned for 2022 – because the original plan was to increase sales by up to a fifth. For 2023, Keller is even assuming a drop in revenue of twelve percent.

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

/tav/ag/stk

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Image sources: Hypoport, Hypoport AG