Intrinsic Value Warteck Invest AG (WARN.SW)

• Previous Close: CHF1,965.00
• Intrinsic Value: CHF1,148.04
• Upside potential: -42%

Stock Valuation Context

Business Model And Market Position

Warteck Invest AG operates as a Swiss real estate investment firm specializing in residential property rentals, with a geographically diversified portfolio spanning 11 cantons. The company generates stable income through long-term leases, primarily in the Swiss apartment market, benefiting from the country’s strong demand for housing and limited supply. Its focus on high-quality properties in well-located urban and suburban areas enhances tenant retention and rental yield stability. Warteck’s market position is reinforced by Switzerland’s robust legal framework for landlords and a historically low vacancy rate, which supports consistent cash flows. The firm’s conservative growth strategy prioritizes asset quality over aggressive expansion, aligning with Switzerland’s regulated real estate environment. While it faces competition from larger REITs and private landlords, its regional diversification and operational efficiency provide resilience against localized market fluctuations.

Revenue Profitability And Efficiency

Warteck reported revenue of CHF 43.99 million in the latest fiscal period, with net income of CHF 23.08 million, reflecting a high net margin of approximately 52.5%. The company’s operating cash flow of CHF 21.02 million underscores efficient property management, while modest capital expenditures (CHF -0.72 million) indicate a mature portfolio requiring limited reinvestment.

Earnings Power And Capital Efficiency

Diluted EPS of CHF 82.23 highlights strong earnings power, supported by a debt-to-equity ratio that suggests prudent leverage. The firm’s ability to convert rental income into free cash flow (operating cash flow minus capex) demonstrates capital efficiency, with funds available for dividends or selective acquisitions.

Balance Sheet And Financial Health

Total debt of CHF 456.53 million is offset by cash reserves of CHF 17.82 million, indicating manageable leverage. The company’s liquidity position appears stable, with debt service likely covered by recurring rental income, though refinancing risks should be monitored given the interest rate environment.

Growth Trends And Dividend Policy

Growth is likely organic, driven by rental indexation and selective asset upgrades. The generous dividend of CHF 104.23 per share (yield ~5.8% at current market cap) signals a commitment to shareholder returns, though payout sustainability depends on stable occupancy and cost control.

Valuation And Market Expectations

At a market cap of CHF 628 million, the stock trades at a P/E of ~7.6x (based on diluted EPS), below sector averages, possibly reflecting investor caution toward Swiss real estate’s regulatory risks. The low beta (0.078) suggests defensive characteristics, aligning with its income-focused profile.

Strategic Advantages And Outlook

Warteck’s regional diversification and Switzerland’s housing demand underpin its defensive appeal. However, exposure to interest rate hikes and tenant protection laws poses risks. The outlook remains stable, with incremental value creation likely from operational optimization rather than aggressive expansion.

Sources

Company description, financials from disclosed ticker data, Swiss real estate market reports