Intrinsic Value Allreal Holding AG (ALLN.SW)

• Previous Close: CHF226.00
• Intrinsic Value: CHF108.28
• Upside potential: -52%

Stock Valuation Context

Business Model And Market Position

Allreal Holding AG is a Swiss real estate company with a diversified business model spanning property investment and development. Its Real Estate division focuses on owning and managing a portfolio of residential and commercial properties, generating stable rental income while offering ancillary services like portfolio and building management. The Projects & Development division specializes in real estate consultancy, project development, and contract administration, capitalizing on Switzerland's dynamic property market through strategic acquisitions and sales. The company operates in a competitive but resilient sector, benefiting from Switzerland's strong economic fundamentals and high demand for quality real estate. Allreal’s dual focus on long-term holdings and value-add development projects positions it as a balanced player, mitigating cyclical risks while capturing growth opportunities. Its market position is reinforced by a reputation for high-quality developments and efficient property management, appealing to both institutional and private investors.

Revenue Profitability And Efficiency

Allreal reported revenue of CHF 420 million, with net income of CHF 211.4 million, reflecting strong profitability. The diluted EPS of CHF 12.8 underscores efficient earnings generation. Operating cash flow stood at CHF 85.1 million, while capital expenditures were minimal at CHF -3.6 million, indicating disciplined investment and operational efficiency. The company’s ability to convert revenue into net income highlights its cost management and revenue stability.

Earnings Power And Capital Efficiency

The company’s earnings power is evident in its robust net income margin of approximately 50%, driven by high-margin real estate holdings and development projects. Capital efficiency is supported by a balanced approach to reinvestment, with modest capex relative to operating cash flow. The low beta of 0.427 suggests earnings resilience, though reliance on debt (CHF 2.7 billion) warrants monitoring of interest rate exposure.

Balance Sheet And Financial Health

Allreal’s balance sheet shows CHF 4.1 million in cash against total debt of CHF 2.7 billion, indicating significant leverage. However, the stability of Swiss real estate markets and the company’s asset-heavy model provide a buffer. The debt load is typical for real estate firms, but refinancing risks in a rising rate environment could pressure financial flexibility.

Growth Trends And Dividend Policy

Growth is supported by a mix of rental income and project development, with dividends of CHF 7 per share reflecting a commitment to shareholder returns. The dividend yield, coupled with retained earnings for reinvestment, suggests a balanced approach to growth and income distribution. Market cap growth aligns with sector trends, though development cycles may cause periodic volatility.

Valuation And Market Expectations

With a market cap of CHF 3.1 billion, Allreal trades at a premium reflective of its stable income streams and development upside. The low beta implies lower volatility, appealing to conservative investors. Valuation multiples should be assessed against Swiss real estate peers, accounting for interest rate sensitivity and regional demand dynamics.

Strategic Advantages And Outlook

Allreal’s strategic advantages include its dual revenue model, prime Swiss locations, and reputation for quality. The outlook remains positive, supported by Switzerland’s robust property market, though macroeconomic headwinds like rising rates could temper growth. Focus on high-demand segments and efficient capital deployment positions the company for sustained performance.

Sources

Company description, financial data from disclosed metrics (market cap, revenue, net income, etc.)