Investors Real Estate Trust D/B/A Centerspace

CSR Details

Investors Real Estate Trust D/B/A Centerspace (NYSE: CSR) is a real estate company, which is in the business of developing, managing, and acquiring apartment communities in the United States. It has 62 apartment communities consisting of 11,579 homes as of June 4, 2021. As of June 24, 2021, the company’s market capitalization stood at USD 1.02 billion.

Expansion through Acquisition: On January 6, 2021, CSR completed the acquisition of Union Pointe Apartment Homes, for an aggregate purchase price of USD 76.9 million. The acquisition was funded via issuance of USD 50.0 million of 2.7% Unsecured Series C Notes. Union Pointe includes 256-home apartments in Longmont, Colorado, which expand CSR’s previously Denver-focused portfolio. On June 3, 2021, the company further announced the acquisition of 2,697 apartments in 17 communities in Minnesota KMS Management, Inc., for USD 323.8 million. The consideration was financed through the issuance of convertible preferred units. The transaction is expected to close in Q3FY21.

Q1FY21 Results: CSR reported total revenue of USD 46.65 million for Q1FY21 (ending March 31, 2021) as compared to USD 44.40 million in Q1FY20, registering a lower single-digit growth of 5.05% YoY. The growth in the topline can be attributed to the expansion in average rental revenue. The increase of 13.94% in the general and administrative expenses in Q1FY21 pulled the operating income down by 18.11% YoY. CSR reported an operating income of USD 1.64 million in Q1FY21 vs USD 2.0 million in Q1FY20. Net loss for the company contracted by USD 2.53 million to USD 5.16 million in Q1FY21 in contrast to USD 7.68 million in Q1FY20.

Key Risks: The majority of CSR's investments are in the multifamily sector, which makes it prone to risks associated with product concentration. Any decline in demand for multifamily housing may have a profound impact on the operations of the company. In addition, CSR carries a certain type of debt in its balance sheet which mandates it to maintain certain financial and non-financial covenants, non-compliance of which would be considered as a default on the part of CSR, which could have serious repercussions for the company.

Outlook: In its Q1FY21 press release, the company outlined that for FY21, it expects a 0% to 3% growth in revenue, with an increase in expenses in the range of 3.0% - 5.0%. CSR expects to clock net operating income between USD 109.60 and USD 112.60 million, with EPS ranging from USD 0.10 to USD 0.50.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CSR Daily Technical Chart

Stock Recommendation: CSR has increased 12.87% and 24.78% in the past 3 and 9 months, respectively, and is currently close to the higher band of the 52-week range of USD 61.49 to USD 78.76. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 64.66. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 66.86. Considering the consistent increase in stock price, we believe the current share price sufficiently reflects the strong business fundamentals and have chosen to remain on the sidelines. Therefore, we recommend an “Expensive” rating on the stock at the closing price of USD 77.20, down by 0.09% as of June 24, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.

Sesen Bio, Inc.

SESN Details

Sesen Bio, Inc. (NASDAQ: SESN) is a late-stage clinical company focused on developing and commercializing targeted fusion protein therapeutics (TFPTs) for the treatment of cancer patients. SESN’s flagship offering is Vicineum, which is a locally-administered TFPT used in the treatment of BCG-unresponsive non-muscle invasive bladder cancer (NMIBC). Its product pipeline also includes VB6-845d, which will be used to cure various types of anti-epithelial cell adhesion molecule (EpCAM)-positive solid tumors. As of June 24, 2021, the company’s market capitalization stood at USD 713.94 million.

Overcoming Supply Barriers with Strategic Collaborations: On June 01, 2021, the company entered into a global manufacturing and supply agreement of Vicineum drug substance and drug product with Qilu Pharmaceutical, a world-class biomanufacturer with extensive supply experience. Under the agreement, SESN will receive a USD 2.0 million milestone payment upon completion of technology transfer to Qilu Pharmaceutical, expected in FY21. This partnership will enable SESN to ensure a reliable supply of Vicineum worldwide.

Q1FY21 Results: SESN reported total revenue of USD 4.31 million for Q1FY21 (ending March 31, 2021), however, it did not report any revenue for Q1FY20. The company incurred research and development expenses of USD 6.08 million in Q1FY21 as compared to USD 8.87 million in Q1FY20. The reduction was attributable to the reduced cost of technology transfer and manufacturing, and decreased clinical trial expenses. General and administrative expenses increased by USD 1.84 million in Q1FY21, primarily due to increased employee-related expenses because of increased headcount and higher legal and professional fees. SESN reported a net loss of USD 55.51 million for Q1FY21 in contrast to a net profit of USD 41.56 million in Q1FY20.

Key Risks: SESN’s prospects are dependent solely on the commercial success of Vicineum, its only product offering. It has invested a considerable amount of resources in its development, and if it fails to obtain the marketing approval or put an efficient manufacturing and distribution mechanism in place, its results of operations would be adversely impacted. Moreover, SESN operates in a highly regulated industry and it must comply with strict quality control norms, non-observance of which would lead to recall or even suspension of the products.

Outlook: In its Q1FY21 Report, SESN stated that it foresees regulatory approval of Vicineum in the US in FY21. Update provided by SESN rides on the acceptance of its Biologics License Application (BLA) by the Food and Drug Administration (FDA). Vicineum is currently under priority review with the FDA, with a target Prescription Drug User Fee Act (PDUFA) date of August 18, 2021. With all these anticipated developments, the company expects to commercially launch Vicineum in the US in Q4FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

SESN Daily Technical Chart

Stock Recommendation: SESN has increased 50.72% and 232.54% in the past 3 and 6 months, respectively, and is currently close to the higher end of the 52-week range of USD 0.66 to USD 4.68. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 64.94. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 3.56. Considering the significant uptick in the stock price, we believe the current share price sufficiently reflects the strong business fundamentals and have chosen to remain on the sidelines. Therefore, we recommend an “Expensive” rating on the stock at the closing price of USD 4.19, up by 1.70% as of June 24, 2021.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.