INITIATION OF COVERAGE – 28.08.2023

Arras Group SpA is a technology company specialized in property development of second homes, established in 2020 by an initiative of Enrico Arras, professional with over ten years of activity in the second home real estate development sector. The Company is a developer in the second homes and holiday accomodations segment active mainly in the North and South of Sardinia, turning to international clients with the support of cutting-edge technological systems. Arras Group SpA, at the top of the Group of the same name, is present in particular in the Italian market. After having internalized a series of operational functions, professionalism, and technologies, the Company is able to follow the entire real estate development process, from the land selection phase to the construction and sale of the property. Each company belonging to the Group represents an initiative or real estate project developed by an ad hoc vehicle, 100% controlled by Arras Group, structured as an operating holding company that maintains all central services such as feasibility studies, planning, and marketing. Specifically, in addition to the subsidiary Ristrutturazione Veloce Srl, engaged in managing contracts for third parties, Arras Group as of 30 June 2023  is engaged in the development of 12 real estate initiatives, of which 8  are already underway and 4 in pipeline.  Arras Group specifically is active in the real estate market of holiday homes in Sardinia, a market that shows a high demand for buying and selling second homes but which does not correspond to an adequate supply. Focusing on the residential market of national tourism, before the segment of Sardinia, Nomisma’s data show that 2021 was a year of growth for the real estate market in tourist resorts. Compared to 2020. In fact, there was an increase in sales in maritime tourist resorts equal to 41.1% and for the end of the year, Nomisma estimates an increase of 12.0% overall (therefore considering the sea, mountain, and lake destinations). Given the lack of companies comparable with Arras Group, we conducted the valuation of the Company’s equity value based solely on the DCF methodology. The equity value resulting from the application of the DCF method (which in the calculation of the WACC also includes a specific risk of 2.5% for prudential purposes) is € 9.6 million. Therefore, the target price is equal to € 1.40, rating BUY, risk MEDIUM.

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