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1. Company Snapshot

1.a. Company Description

Mercialys is one of France's leading real estate companies, focused exclusively on shopping centers and high-street retail assets.At June 30, 2020, Mercialys had a portfolio of 2,111 leases, representing a rental value of Euro 182.3 million on an annualized basis.At June 30, 2020, it owned properties with an estimated value of Euro 3.5 billion (including transfer taxes).


Mercialys has had “SIIC” real estate investment trust (REIT) tax status since November 1, 2005 and has been listed on Euronext Paris Compartment A (ticker: MERY) since its initial public offering on October 12, 2005.At June 30, 2020, there were 92,049,169 shares outstanding.

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1.b. Last Insights on MERY

Mercialys' recent performance was driven by a series of positive developments. The company revised its full-year target upward, indicating a strong outlook for its business. Additionally, Mercialys filed its 2025 half-year financial report with the French Financial Markets Authority, providing transparency and clarity on its financial performance. The company's liquidity agreement also showed a positive trend, with resources recorded in the liquidity account as of June 30, 2025. Furthermore, Mercialys successfully placed a Euro 300 million bond issue with a 7-year maturity, demonstrating its ability to access capital markets. The company's acquisition of Hyperthétis Participations and Saint-Genis 2 shopping center also contributed to its positive performance.

1.c. Company Highlights

2. Mercialys' 2025 Earnings Report: A Strong Performance

Mercialys reported a solid financial performance for 2025, with rental revenues reaching EUR 180.6 million, growing by 1.7% on a pro forma basis. The company's EBITDA margin stood at 82.4%, a 40 bps increase, and net recurrent earnings came in at EUR 117.5 million, a 3.9% increase over 12 months. The EPS was EUR 0.2458, missing analysts' estimates of EUR 0.59. The company's financial performance was driven by its strategic repositioning, with a focus on optimizing its cost base and deploying artificial intelligence in its back office.

Publication Date: Mar -05

📋 Highlights
  • EBITDA Margin & Recurring Income Growth:: EBITDA margin increased by 40 bps to 82.4%, while recurring net income rose 3.9% to EUR 117.5 million in 2025.
  • LTV Ratio Improvement:: Leverage ratio (LTV) dropped 260 bps to 39.5% in six months, reflecting stronger financial discipline.
  • Investment Campaign Returns:: EUR 176 million invested in 2025 with an average 9% return; plans for up to EUR 100 million in 2026.
  • Project Pipeline Impact:: Brest and Niort projects drove footfall growth of +50% and +30%, targeting 15% rent increases in Grenoble post-completion.
  • Dividend & Capital Allocation:: Dividend payout targeting 80% of NRE per share, maintaining net debt/EBITDA below 8x and ICR above 3.5x.

Operational Highlights

The company's operational performance was strong, with a gross rental revenue increase of 2.8% on a like-for-like basis, excluding doubtful debtors' effect and JV marketing fees. Mercialys' project pipeline is expected to drive future growth, with projects in Brest, Niort, and Grenoble aimed at increasing footfall and rental revenues. The company's investment campaign in 2025 was successful, with EUR 176 million invested for an average return of around 9%.

Valuation and Outlook

Using the provided valuation metrics, we can see that Mercialys trades at a P/E Ratio of 32.56, a P/B Ratio of 1.86, and an EV/EBITDA of 15.88. The Dividend Yield stands at 8.49%. The company's outlook for 2026 is positive, with a growth of rental revenues between 5% and 7% on a compound annual basis. The guidance incorporates the increase in the company's cost of debt and the effect of disposals associated with its permanent asset rotation policy. As Vincent Ravat, CEO of Mercialys, stated, the company is confident in finding opportunities and believes that high yields will encourage banks to refinance potential vendors, facilitating the acquisition process.

Investment Strategy

Mercialys' investment strategy is focused on assets with a wide range of offers and low costs, which can be transformed into dominant local assets. The company has a criteria of 10% IRR for investments and a yield of at least 8% for new projects. The company's post-acquisition model is industrialized, with a focus on improving merchandising, vacancy, expenses, and ancillary revenues.

3. NewsRoom

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Assessing Mercialys (ENXTPA:MERY) Valuation As Recent Share Price Momentum Meets Rich P/E Multiple

Mar -18

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Mercialys: Press Release Concerning the Publication of the 2025 Universal Registration Document

Mar -17

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Mercialys SA (MEIYF) Full Year 2025 Earnings Call Highlights: Strong Financial Performance and ...

Feb -18

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Mercialys: 2025 NRE up +3.9%

Feb -17

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Mercialys Reinstated on the CDP Climate "A List" for Climate Leadership

Jan -27

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Assessing Mercialys (ENXTPA:MERY) Valuation As Shares Trade Below Estimated Fair Value

Jan -15

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Half-Year Review of Mercialys’ Liquidity Agreement

Jan -06

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Mercialys: Departure of Ms Élisabeth Cunin, director

Dec -11

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Shopping Centers and Commercial Sites

Expected Growth: 4.0%

Mercialys' Shopping Centers and Commercial Sites segment growth of 4.0% is driven by increasing foot traffic, strategic location renovations, and a strong tenant mix. Additionally, the company's focus on omnichannel retailing, experiential offerings, and data-driven marketing strategies contribute to the growth. Furthermore, the segment benefits from a solid pipeline of redevelopment projects and a favorable macroeconomic environment.

7. Detailed Products

Shopping Centers

Mercialys owns and operates a portfolio of shopping centers in France, offering a range of retail spaces for various brands and retailers.

Hypermarkets

Mercialys partners with hypermarket chains to provide large retail spaces for grocery and general merchandise sales.

Retail Parks

Mercialys develops and manages retail parks, offering a mix of retail, food, and leisure activities.

Urban Retail

Mercialys offers urban retail spaces in prime locations, suitable for various retail and service businesses.

Logistics and Warehousing

Mercialys provides logistics and warehousing solutions for retailers and e-commerce companies.

8. Mercialys's Porter Forces

Forces Ranking

Threat Of Substitutes

Mercialys operates in the retail property market, where substitutes are limited. However, the rise of e-commerce and changing consumer behavior pose a moderate threat.

Bargaining Power Of Customers

Mercialys' customers, including retailers and restaurants, have significant bargaining power due to their large scale and ability to negotiate rents.

Bargaining Power Of Suppliers

Mercialys has a diversified supplier base, reducing its dependence on individual suppliers and limiting their bargaining power.

Threat Of New Entrants

The retail property market has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to compete with Mercialys.

Intensity Of Rivalry

Mercialys operates in a competitive market, but its diversified portfolio and strong brand recognition help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 1.58%
Debt Cost 11.75%
Equity Weight 98.42%
Equity Cost 11.75%
WACC 11.75%
Leverage 1.60%

11. Quality Control: Mercialys passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Wereldhave

A-Score: 7.3/10

Value: 5.5

Growth: 4.0

Quality: 6.6

Yield: 9.4

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Patrimoine et Commerce

A-Score: 6.9/10

Value: 4.9

Growth: 4.8

Quality: 5.1

Yield: 8.8

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Retail Estates

A-Score: 6.9/10

Value: 5.5

Growth: 3.9

Quality: 6.4

Yield: 9.4

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Mercialys

A-Score: 6.0/10

Value: 3.9

Growth: 3.1

Quality: 5.1

Yield: 10.0

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Frey

A-Score: 5.9/10

Value: 3.4

Growth: 5.4

Quality: 4.5

Yield: 9.4

Momentum: 2.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Vastned Retail

A-Score: 4.0/10

Value: 5.8

Growth: 3.7

Quality: 4.3

Yield: 5.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.76$

Current Price

11.76$

Potential

-0.00%

Expected Cash-Flows