Dom Development is Poland's premier residential developer (Warsaw, Tri-City, Wrocław, Kraków), pre-selling into escrow and recognising revenue at handover. Börsdata routes it as a financial, so the note runs on the book-equity frame: LTM attributable net income 685.8 MPLN on average parent equity of 2,009 MPLN gives an ROE of 34.1% (ROTE 34.6%), with no goodwill on the balance sheet.
Operationally the machine is at full stretch: FY2025 deliveries 4,228 units (+8%), Q1 2026 the strongest first quarter in Group history (1,161 units sold, +12% YoY; revenue +30%), the seventh straight quarter at or above 1,000 units. Gross margin widened to 34.4% (2024: 32.2%) in a flat market, cumulative inventory write-downs are just 0.7% of a 5.1bn PLN inventory, and 1.9bn PLN of customer prepayments gives ~7 months of forward revenue cover. Demand is being carried by rate cuts (58% of sales mortgage-financed).
The catch is the cycle. A 34% ROE for a residential developer is a peak-year print, not a through-cycle level, and the drivers — mortgage affordability, competitor undersupply of the right product, cycle-high gross margins — are all mean-reverting. The record itself flags that a ~3x book multiple is justified only while ROE stays above 30%. Rated through-cycle, the equity is fairly valued, not cheap.
On the Gordon frame, P/TBV 3.08x with Kₑ ~11.5% and g 3% implies a sustained ROE of ~29% — barely below the current 34.1% peak print. At a conservative mid-cycle ROE in the low-20s the justified multiple sits nearer ~2.3x tangible book (~192 PLN before growth optionality), so today's 256 PLN pays up front for the cycle staying at strength. P/E 9.6x and the ~5.5% dividend yield cushion the wait but do not create a margin of safety.
Base PLN 265 (+4%): margins normalise toward ~31%, deliveries hold ~4,300, the multiple holds near 10-11x with the PLN 14 dividend carrying the total return. Bull PLN 320 (+25%): Polish rate cuts extend the demand cycle, deliveries grow and the 34% gross margin holds. Bear PLN 175 (−32%): rates back up, pre-sales fall below deliveries and the stock reverts toward ~2.1x tangible book on compressed earnings. 24-month horizon.
Residual-income panel unavailable: non-positive book equity.
| Scenario | 24m target | Upside | Prob. | Driver |
|---|---|---|---|---|
| Bull | PLN 320 | +25% | 25% | Rate-cut cycle extends demand; deliveries grow, 34% gross margin holds |
| Base | PLN 265 | +4% | 45% | Margins normalise toward ~31%; dividend carries the total return |
| Bear | PLN 175 | -32% | 30% | Polish rates back up; pre-sales and margins roll over toward ~2.1x TBV |
| Prob-weighted | PLN 252 | -2% | 100% | Scenario-weighted expected value |
7th straight quarter at/above 1,000 units sold; 1.9bn PLN escrow prepayments = ~7 months of forward revenue cover.
Gross margin widened to 34.4% FY2025 (2024: 32.2%) in a flat market — pricing power on a well-bought land bank.
ROE 34.1% / ROTE 34.6% on a goodwill-free balance sheet, >20pp above cost of equity at the cycle high.
Net debt ex-leases 506 MPLN (~0.23x equity) with 447 MPLN cash — funding land-bank growth without stress.
PLN 14/share for 2025 (~55% payout, ~5.5% yield); final PLN 7 tranche payable 2 Jul 2026.
Dom Development is an exceptionally well-run developer printing peak-cycle economics — 34% ROE, record pre-sales, cycle-high margins, modest leverage. But at 3.08x tangible book the market already pays for that peak persisting; rated through-cycle the equity is fairly valued. HOLD, medium conviction; base target PLN 265 (+4%) with the ~5.5% dividend carrying the return.
A rate-cut-extended demand cycle is the upside; a Polish rate back-up rolling over pre-sales and margins is the principal risk. A pullback toward ~2.3x tangible book (~PLN 190-200) would offer the entry the current price does not.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| FY2025 net profit attributable to owners of the parent | 654,182 kPLN | Consolidated statement of profit or loss, p.6 📄 p.6 | LTM anchor for net income; attributable figure used because a (trivial, negative) NCI line exists. |
| Q1 2026 net profit attributable (180,001) and Q1 2025 comparative (148,366) | 180,001 / 148,366 kPLN | Interim condensed consolidated statement of profit or loss, p.4 📄 p.5 | Stub quarters for the LTM roll: 654.182 + 180.001 - 148.366 = 685.817 MPLN LTM attributable net income. |
| Total equity 2,170,573 kPLN; equity to parent 2,170,452; NCI 121 | 2,170,573 kPLN | Interim condensed consolidated balance sheet, p.3 📄 p.4 | Latest interim equity snapshot is the stock base for P/BV; NCI is de minimis (0.1 MPLN). |
| 31 Mar 2025 equity derived from SOCE comparative | 1,848,153 kPLN (parent) | Interim condensed consolidated statement of changes in equity (comparative period), p.8 📄 p.9 | Opening 1,701,662 + Q1 2025 net comprehensive income to parent 146,491, no dividends/other movements in the quarter - gives the LTM-average denominator for ROE (34.1%). |
| Intangible assets 26,694 kPLN, no goodwill | 26,694 kPLN | Interim condensed consolidated balance sheet, p.3 (FY Note 7.6 confirms composition: software/trademark, no goodwill line) 📄 p.4 | Tangible equity = 2,170,452 - 26,694 = 2,143,758 kPLN; goodwill is zero so P/TBV is nearly identical to P/BV. |
| Inventory 5,076,077 kPLN (land bank + WIP + finished units) | 5,076,077 kPLN | Interim condensed consolidated balance sheet, p.3; composition in FY Note 7.9 (p.22): WIP 4,421.3 MPLN, finished 502.3 MPLN, cumulative write-downs only 37.1 MPLN 📄 p.4 | A developer's inventory is its productive asset base; write-downs at 0.7% of gross inventory signal no margin stress in the land bank. |
| Interest-bearing debt 953,070 kPLN vs cash 446,647 - net debt ex-leases 506,423 kPLN | 506,423 kPLN | Interim BS p.3: bank borrowings 49,952 LT + 0 ST, bonds 785,000 LT + 110,000 ST, accrued interest 8,118; cash 446,647 📄 p.4 | Net debt ~0.23x equity is modest for a developer; bonds LT grew 535 to 785 MPLN in Q1 2026 (new issuance) funding land-bank expansion. Adding leases (134.6 MPLN) reconciles to Borsdata's 632.9 net debt. |
| Deferred income (customer prepayments) 1,906,597 kPLN | 1,906,597 kPLN | Interim condensed consolidated balance sheet, p.3, line Deferred income (Note 7.14) 📄 p.4 | Pre-sold-but-undelivered escrow prepayments = forward revenue cover of roughly 7 months of LTM revenue; the pre-sales engine behind revenue visibility. |
| Q1 2026: 1,161 units sold, +12% YoY, strongest Q1 in history | 1,161 units | Note 7.23 Factors and events, p.21 📄 p.22 | Management discloses inventory at under four quarters of forward sales while competitors face oversupply - supports the sustainability of the 34% ROE. |
| FY2025 deliveries 4,228 units (2024: 3,916) | 4,228 units | Deliveries of residential and commercial units, p.51-52 📄 p.52 | Volume growth +8% YoY underpins the FY revenue growth to 3,255.6 MPLN; revenue recognized at unit handover (point in time), so deliveries drive the P&L. |
| Dividend: PLN 14/share for 2025 (361.2 MPLN, ~55% payout), interim 7 paid Dec 2025, final 7 payable 2 Jul 2026 | PLN 14.00/share | Note 7.24 Dividend and distribution of profit, p.23 📄 p.24 | Consistent cash-return policy at ~55% of parent net profit; the final PLN 7/share (180.6 MPLN) leaves equity shortly after period-end - book value slightly overstated versus post-dividend. |