8 January 2019 – Idealista
Few events are as long-awaited by investors and analysts as the presentation of the strategic plan of a listed company. Above all, when that company has had a difficult year on the stock market, such as the case of Urbas. The real estate company, a classic amongst the ‘small cap’ or companies with a small market capitalisation in the Spanish market, is leading the first stock market rally of 2019 in the sector after losing almost 75% of its value in 2018.
During the first week of the year, Urbas’s share price has recorded a large rise of 30%. In reality, the reaction began during the final week of last year, when the group revealed the broad strokes of its strategy for the period 2019-2024. Its plan pivots around a reduction in the level of debt, generating value from its assets and the payment of a dividend from 2022.
The market has picked up on the company’s message, which with a land portfolio of almost 18 million m2, also wants to provide a new boost to its property developer business. But its number one objective is to reorganise its debt balance, which amounted to €194 million at the end of the third quarter, up by 3.7% compared to the same period a year earlier. The figure contrasts with the just over €16 million that the company is currently worth on the stock market.
The objective is to reduce the debt figure to €86 million. To achieve that, Urbas faces the challenge of moving forward with the dual negotiations that it is holding on the one hand with its creditor banks and on the other hand with Sareb to refinance its indebtedness to the necessary levels to allow it to handle new investments.
Therefore, the group’s plans are aggressive, as shown by the fact that Urbas wants to finish the first year of its new business plan with revenues of more than €20 million and a net profit of more than €14 million. By the end of the period, in 2024, the forecasts skyrocket. But, today, the reality of the group is very different. Until 30 September, Urbas lost €5 million due to the effect of the financial interest adjustment made and its revenues slightly exceeded €2 million.
In any case, the sharp rise in Urbas’s share price so far this year should be considered with the utmost caution. It is a very small security with very limited liquidity, which means that its movements may be brusque and fast, both up and down. In recent years, it has recorded large fluctuations. With the sole exception of 2017, the share price has always moved by at least 33% in each of the last nine years (…).
Original story: Idealista
Translation: Carmel Drake