Recently, monthly distributor Cibus initially fell on their Q3 report which was slightly worse than expected. The company is doing the right thing by investing in a still shaky market. When interest rates later stabilize, this will benefit Cibus well.
By acquiring, improving and managing properties in the food and grocery trade, it provides a good monthly dividend to the shareholders.
Cibus is the real estate company where you not only get a monthly dividend but also enormous exposure to the grocery trade, which is a non-cyclical market. This accounts for 97% of the company’s total operating net.
In quarter 3, the management result was 13.2 million euros against the expected 13.7 million.
My view of what Cibus will be able to distribute next year has not changed and I believe that the dividend will still be maintained at EUR 0.9 per share. The problem is that almost the entire result is distributed and the last thing Cibus will want to do is scrap this as the distribution is sacred. Many believe that Cibus has an unhealthy relationship with dividends and that a substantial reduction would be better in the longer term.
Now that the worst may be over, Cibus has managed well. Today, Cibus is trading at a 5.8% dividend yield, which also indicates that the market believes that the worst is over. This is far from the level that was before when the dividend yield was around 9%.
What is good is that Cibus actually succeeded with its targeted new issue of just over SEK 900 million. They did not rest on their laurels afterwards and since the new issue have acquired nine properties in Denmark, Finland and Sweden. Already next quarter (Q4) we will see the profit impact of these acquisitions.
In addition, they seem to be prepared to expand into new markets. I am more unsure about this, mostly as I have seen that a global expansion does not have to be the key to success for many.
The issue was a successful recipe for continuing to expand without having to burden the balance sheet. Right now this is under control with a loan-to-value ratio of 54.6%.
Recently, Nordea has raised its recommendation on Cibus and set a target price of SEK 200. Now, the rate stands at SEK 175. At most, the share peaked at SEK 290 in 2021 before the interest rate hikes started trickling in from the Riksbank.
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