Echo Investment SA

WSE:ECH

Earnings Call Transcript 2023-Q1

[Weronika Ukleja-Salak, executive]

Welcome, ladies and gentlemen, at the quarterly results of Echo Investment Group. I'm Weronika Ukleja-Salak. I'm the company's spokesperson, and I'm here with Nicklas Lindberg, our CEO; and Maciej Drozd, CFO of the company. As usual, we'll start with the results presentation and then we'll follow up with the Q&A session. So without further ado, Maciej, please take it away.

[Maciej Drozd, executive]

Thank you. So let's look at key events. So what are the main things? What are the most important events that happened recently that we think that we should all together focus on. First, it's Towarowa. Towarowa is the biggest project in Echo history. It's about 6 hectare plot, in the city of Warsaw and the project has been released recently. So we showed what is our intention for this plot. And what is the most important, we started to build.

So the first office building is already under construction. And what is equally important also that the City of Warsaw released the draft of master plan, showing that the project is visible and that it should start shortly. So we intend to build as quickly as it will be possible from the permitting point of view. The project will comprise, among others, of residential part, which will be fully developed by Echo and from commercial part, which is offices and residential for rent with some additional services that we will develop in a JV with our partner, we will own 30% of that JV and of that project.

We are very, very proud that we are starting such a big, and we are show very, very good project that will be -- our pride and also pride of citizens of Warsaw also, we believe. The next very, very important event is -- looks like internal organization, but it is much more than that. We decided to contribute entire residential business that is within Echo Group to Arhicom. Arhicom, so far was developed by [indiscernible] and Arhicom and Echo agreed that Echo will contribute its project in Poland, so in Warsaw Kraków Poznan [indiscernible].

So that way, we will create one of the largest developers in Poland -- one of the largest residential developers in Poland. And our intent is that this is a start of the growth of that company. So it will not only maintain what is there, but will grow very strongly. It's also important that Echo itself will continue focusing on Resi4Rent, which is a very, very strongly growing segment, and we have a full confidence that it will be at least equally strong as residential for sale. And also, we will maintain our activity in the commercial segment, which is offices, services and also flexible offices. So city space, our flexible office operator.

And as I said, we very much believe in the growth potential of both parts. In residential for sale, we will intend -- we intend to grow not only in the cities where we are present, but also to expand to Tricity. And in Echo part, Resi4Rent, we see huge potential huge growth, but Nicklas will talk a little bit more about that later.

Let's look at what's going on in the market and how well we are prepared for that. So if you look at Echo now you will see that we have a very strong cash position, strong balance sheet, strong client bank. We continue to sell office projects, creating liquidity. Our Resi4Rent business has a very strong pleasing performance. We are fully leased with a very strong year-on-year rental growth.

We continue to issue bonds to provide funding for growth. And what is also very important, we exercised our option to buy a little bit more than 8% of Arhicom shares. So we show our confidence and our intent to grow that business. Let's look at the segments of our activity, what's going on there, how the market is performing.

In residential, it's very clear that the market came back after relatively weak 2022. 2023 started very strongly, and we see both volume growth and the growth of pricing. And we believe that this will continue. So, the market will grow more and more apartments will be sold and the prices will also continue to grow on the main markets.

What we are doing right now, we are focusing mainly on growing our offer on growing our land bank on buying new projects because we believe that the market demand will be there and we want to be ready with new projects. We very much also focused on the margin because we believe that the environment is good, and we should be able to keep high margins both because of strong demand, but also because of our management of construction costs.

Resi4Rent, as I already mentioned before, this is the segment which is growing strongly and also showing very strong rent performance, meaning that we have high year-on-year rental growth. We have fully let apartments. And on this basis, we are mainly focusing on first, completing projects in the pipeline with our intent to build 10,000 apartments by 2025 and also on acquiring new projects because we believe that the market offers very good opportunities to buy, but also to grow the business.

In offices, we see a little bit less activity on the investment side, but we see a good performance in leasing. So because less projects are being built and the demand is still there. We see that this rental growth, there's a good demand coming from potential tenants. And on this basis, we intend to continue our performance in this segment, starting new projects, of course, selling projects that are completed, but also buying land for new projects and maintaining our presence in that segment.

Retail performance continues to be strong. If you look at year-on-year figures, they are very, very good, both in terms of tenant and turnover and footfall. We see that in our projects in Galeria Mlociny and in Libero, and we focus here on improving rents on increasing NOI, because, again, the market is supporting that strategy.

I already mentioned management of construction costs. We see that compared to last year's, the situation changed because less projects are started, especially in residential segment and this situation continues. There's more and more construction companies that have resources that they don't really have work for. So we are able to reduce prices on our projects, and that's a very good strength. We believe that this strength will stay with us for some time and will benefit from a good management of construction prices which is affecting margins in a positive way.

So I would like to highlight certain things for each of the segments. So in Resi4 sale, we are focusing mainly on centrally located projects. We see that the demand is very strong for good projects is less strong in the popular segment. But of course, this will change and this will improve over time. But for the time being, we are definitely focusing on centrally located projects. In Resi4Rent, our focus is on completing construction of our existing pipeline and also starting new projects.

In Commercial segment, we are starting new projects on the main office markets, which is Warsaw, Kraków and Wroclaw. And we have enough cash to do that, so to implement our plans to buy the plots and to continue building the projects. In particular, in Q1, we had good residential sales and improvement of Q4. According to a market trend. We had a very good margin that has been achieved, and we handed over almost 300 apartments.

In the commercial segment, we completed disposal of Moje Miejsce project, which is a Warsaw project for around EUR 44 million. And of course, this reduced our net debt. As I already mentioned, we started the construction of first office building of Towarowa project, which is very important, very good sign for us. And also Arhicom issued in that quarter -- it's EUR 62 million of its office bond program intended to refinance June rollover.

After Q1, we exercised option to buy Arhicom shares, 8% of that. And immediately after that, as I already mentioned, we announced our intention to consolidate our residential activities in Archicom. We continue to lease our office buildings, in particular, REACT office building is now almost fully let, it will be fully let in this quarter and that will make it ready for disposal. And we also have a lot of activity in corporate area after that of Q1. In particular, we continue our activity in -- on the bond market, in particular, we issued yesterday EUR 140 million worth bond issue for 5 years, and again, 5 years as we did also in December.

Dividend, we already paid the dividend in respect of 2022 and we actually recommend to -- not to pay additional dividend in respect of 2022, so we paid PLN 0.22 per share in February. And Archicom is recommending to pay additionally PLN 2.12 per share as additional dividend on top of the dividend that was paid by Archicom in Q4 last year in respect of 2022 profit.

So let's look quickly at the financial data for the quarter. As you can see, our result is slightly better than the consensus with strong revenue, strong margin, but more of that later when we come to the details of the financial part and now Nicklas, please talk about the business.

[Nicklas Lindberg, executive]

Thank you, Maciej. If we look at our residential business, we see a strong residential business. We see strong sales. We see also that we keeping a very stable margin on our handed over projects and the new projects that were being sold. We also see that we are continuing getting more and more plots for the permitting phase. And here it's important for us to stress out that a lot of the projects that were this year are going to put through the permitting phase in residential or in Warsaw, which is the most profitable market for the residential and for all the other segments.

We also see that other developers are also limiting the amount of new products they're putting on the market. So we think this is a good opportunity for us to continue driving the increase of the residential. And coming back to what Maciej has said before, we have now downstream the residential part of our business to Archicom. We will continue that, continue growing Archicom, continue the work that we have talked many now quarters about to create the residential champion that we're having here.

If you look at the market consolidation, you will see that the bigger developers are getting bigger. And this is the trend that we can see will continue going also this year where there will be much more of consolidations in the market, and we will see bigger developers getting a bigger market share and being able to start up more new projects. We also see here what Maciej talked about before, as we have attractive construction prices, we have a stable cash position. This gives us opportunities both to buy land and to start up new projects.

We see prices has increased also over the last quarter. And we see most of all, that demand from buyers coming back on all our markets. We maintain our strategy here of the profitable growth Here, we're continue focusing on keeping the high margin that we're having in all our projects. We have unique locations. We have a strong land bank in the best locations in all different cities. So we are continuing making sure that we keep and give a good margin to all our shareholders and continue delivering good products to the buyer of older apartments.

So -- and also what you will see now in Q2, Q3, Q4, you will see mainly from Warsaw, there will be up -- starting up a lot of new projects that will then continue driving the sales, but also on top of that, when we're starting up in Warsaw, that is highly profitable projects that we will put on the market. And the demand for bank apartments is also -- is extremely strong.

You see here the sales and you see here that if you look at it, we are selling strong in Wroclaw, we're selling strong in all the other markets, we're selling less in Warsaw. And that's coming from that we will see now Q3 -- Q2, Q3 we will start a lot of new projects in Warsaw, and you will see the sale is clearly hiking up in all those markets. So during this year now for the coming 3 quarters, there will be a lot of focusing on starting up new projects in residential. We see a very, very strong demand.

We see the market is there. We have the position and we have fantastic projects in the pipeline. The handovers goes according to plan. We continue handing over. And as you saw before, there was a difference between the margins in in Archicom versus the margins we're having in Echo and that's coming from that Archicom has handing over a lot of projects in the Browary in Wroclaw, and Echo has, in this quarter, handed over a lot of apartments in which that has a slightly lower margin. But over time, you will see that both businesses are keeping roughly the same margins. And it's also depending in which city, in which given quarter, we are handing over the different apartments.

If you look at in here, you see is coming back what I talked about before, when you see the 19 versus 46 in the margin, which gives the blended 33. So what you will see here, blended, we will be in the range of high 30s. And here, we will continue keeping that margin. We will always have more margins when you do very, very central projects in the city centers of Warsaw, where you will see Towarowa is one of those examples where Maciej talked about before. This is a project that has around 200,000 square meters, out of which 50,000 square meters is around residential that's going to be done 100% by the Echo Group.

The other part is 70-30 between AFI and Echo. And this residential what we having here is in the best location in Warsaw and will be a highly profitable apartment. The whole project here where we're going to talk much more in the coming quarters, is project that is very, very important for Echo. There is so much value in this project, and it will continue driving the future growth of the business, but it also will substantially increase the profitability of the whole group as we will see -- you saw the same when we did Warsaw, Brewery. And you will see now when we do Towarowa, the same things happening in our markets.

The offer in the Echo Group, is you see here, we're coming back, you see that we have a very low offer today in Warsaw. When we will be sitting here at the next presentation, you will see a much, much higher ongoing amount of projects in Warsaw. And that's because we have quite a few new projects that is now going through the permitting stage. We have the -- [ M ] Park projects. That is a lot of apartment that's up to 1,600 apartments. We have in Odolany Stacja Wola, it's another 400 apartments. And then on top of that, we have the Towarowa coming up. And all of this is central project in Warsaw that will continue improving our offer.

In Poznan, we have the Apator that's going to be put on, but it's going to add on another project. So you will see here, over the year, you will see that we will start up a lot of projects. You will see the sales will increasing. And most importantly, you will see that we continue defending our margins in the residential segment. So from our perspective, we see a strong residential market.

We see the natural step we have done now with consolidation of the business as a first step. We are now driving with overheads. We are driving consistency to get the best synergies in all this business to create a new resi business within the Echo Group that will continue driving to be the market leader on the residential market. This is an important slide, where you see that we have roughly 12,000 apartments in a land bank.

Assuming that we will sell 3,000 apartments per year. This will give us 4 years of land bank that is already secured and in our bags, so to say. And here is important because a lot of this you will see is 20% of that land bank is Warsaw. And if you go back historically, I don't think we have seen

Echo having that kind of strong land bank in Warsaw. Like Maciej said before, we are continually looking at Kraków to get that up to a higher scale, and we'll continue working on getting Tricity to be added on the map as well.

With these two things, we will then cover all of Poland. And here, we're looking at different options, how would we continue growing our business. And here, we're looking both on growing organically, and we're also looking out future -- adding on future businesses into the group. But this is just for you -- me to highlight that we see a very, very strong residential market. We have the land bank in our own control, and we are now seeing a lot of permitting getting through in -- especially in Warsaw, but also in other markets that will continue driving the profitability of our residential part of the group.

If you look for Resi4Rent, we are now on year 5 into this journey. We have roughly 3,500 units. We have opened up another 350 units. We have another 2,800 units that will be started up. What you will see here is during this year, we will already have started up the projects to be able to hit the 10,000. And 10,000 is something we have talked a lot about. Now we are there. And the 10,000 is the land bank that we have already secured inside the group, and we will then take the clear leader of the market -- leader on the market.

Here, we see also we are spread all of the country in the same way as you see on our residential for-sale map. The only difference here is that we also are covering Tricity, which we also have the target of continued targeting with Echo. We are continued growing here in all the different segments. We are continue growing in Warsaw, where we always want to have the most of the apartments ongoing. And this is just, for us, an important signal. We are continue growing in residence of rent.

We will continue increasing our market leader as -- there we see many other players lockdown. So we think that the position we have taken and we're going to continue driving that position even harder to be the strongest player on the market. We are continuous starting up a lot of projects in Warsaw and in other cities just to continue being the market leader. We've also seen during the last year the prices has increased with more than 30%.

We see now that prices are flattening out and then waiting up -- when you have increased that much during a short period of time, you will hit a plateau and then of that plateau, you will continue increasing again. So this is a very, very interesting business you see both from the people living in the apartment from us as a developer, but also from institutions that are looking very, very interesting into this part of the business. So we are just in the beginning of this business, and this is something we will talk much more in the coming quarter about.

Here, you have a lot of potential, and we are continue growing, and we continue showing that we can deliver the 10,000 units. And you see here, like I talked before, the 10,000 units is already in our pipeline. And the last 600 will be secured in the coming months. And then we will already be there. And what you see here then when we will meet up at the year-end this year, we will have the 10,000 under construction.

So -- and here, we will also benefit on constructing where construction prices are slightly lower, so we will be able to deliver these units by '24, '25. The portfolio is divided among all the bigger cities. And here, you will see also that it's super important for us to continue growing on all the different markets. We have 9,500 units, 27 projects. We will be continue delivering all of them, and we will continue focusing on both how we can get more attractive housing for the people renting for us. And also we will create a much, much better investment product. And we strongly believe this is a product that we have just seen the beginning of and from an investment product is a really clear interest and from many different investors.

All our units are full leased. We are continuing making sure they are fully leased. We get cash flow from all the units, and we continue focusing on starting up more. So it's -- what you will see this slide here, you will see all the units in preparation. We are trying to focus to be able to start them up during the year.

If you look from our commercial business, we had a lot of discussion last year where there was questions about, will you be able to divest all the products you have in your pipeline, which I think we have shown now. We have divested what we said last year, we divested by place in Q1. What we see now is we continue leasing up a lot in all the ongoing projects we're having. We have a very, very low vacancy. We see interest for investing in our projects as well.

What you see today is, of course, yields has moved, as you will see that it's getting more and more expensive from -- by borrowing money from the banks and the interest rates are going up. But we see still here, but with our cost efficiency with the rental growth and the product we're delivering, it's a super interesting product for us to be able to start up new projects to deliver for 2025, when we believe that there will be very little supply of new projects on the market.

We are focusing here on Warsaw, Wroclaw and Kraków, the 3 biggest cities where we see the strong demand going forward. And we are also fitting out Archicom office in midpoint, which was the building we sold last year. My place 2 is another example. We sold it in Q1. It's 100% leased. Here, we are really been able to attract tenants. We have been able to sell it off. This is the second building that we sold in the short time to Trigea. It also shows the comfort, but the investors having enough projects.

And also, it's gives us comfort for the coming months now where we will be able to put more market -- more product in the market and being able to divest. What you see here, we see React I, in, which is 80% leased, will be in the coming months, 100% leased. You see Brain Park I, what we are now 70% leased. We will lease in the coming months, another 10% to 20%. City II , 100% leased; and Libero, 100% leased. And also what you see in Libero strong footfall, strong NOI growth.

You see that really those centers are really picking up now. And this is the centers where we went through COVID. We have learned a lot of things from that. We've been able to create the right tenant mix. And I think now we are starting to really to harvest from all the hard work we put into those centers.

Start of new projects what we say here. Towarowa, the first building of 31,500 square meters is started. We are doing the underground construction as we speak. Swobodna Wroclaw will start shortly now in Q2, and Wita will be starting now in Q3. So you will see over the year, we start three new projects. Out of them, they are destination projects. We will have the mix use both in Towarowa and Kraków Wita, where we both be between offices, residential and other functions.

So here, we're trying consolidated benefit of that. We have so many different businesses with under our own umbrella and this is what we continue growing. So we will both through the year start up new projects. We will divest all projects. And we also -- we will look at alterative ways of finding new businesses to continue growing our commercial part of our business.

From Q1, you see that from a divestment perspective, it was a silent start of the year. We are the one, one of the few being able to sell off a building here in Warsaw. But also what we see here we had a very strong beginning of the year when it comes to tenant demand. So in all our projects, we have seen a clear uplift of tenant demand in all our different locations. And this is something we see will continue increasing, and that's why we want to start up new projects because we believe starting up new projects in the best location in these three cities, we will really benefit from in 2025, where we will deliver all these super green, easy, compliant buildings, but it really will be the future for many of the tenants that want to reconsolidate their business.

CitySpace is another part of our business that is continuous growing. We opened up a new location in Moje Miejsce at Warsaw, where we continue growing our business. We continue working on the profitability, and we continue looking at how can we cover more spaces here. CitySpace will always be part of our business that is crucial as we're opening up all the new tenants today is taking less space than they had earlier. And to cover that gap, they need to have co-working within the buildings. That's why it's so important for us to have that business within the group, continue to add on that service through the existing tenant in the building and also for new smaller tenants.

I think we have just seen the beginning of the co-working and that's going to continue growing and being in importance space. And what you will see here also our business here is among the top leaders. I think we are #2 in Poland today. When you look at co-working, and we were very early in this segment of the market, and we have been continuously growing.

And we are one of the few both being in Warsaw, but also being in the region cities, which means that we cover whole of Poland with our business. If you talk about Libero, which I talked about before, you see the amount of turnover increasing, you see that footfall is increasing. We are replacing the tenant mix. We really see that retail is coming back, both from tenant mix from the level of NOI. So we are really seeing a clear trend here of the profitability. And also, we see investors coming back looking at retail again. So I think retail has been very, very not on the high-end agenda on the coming years.

Now it's clearly coming up on the agenda. And this is something we were profitable in from having the best center in Katowice you see clear NOI growth. You see a clear footfall growth. And you see the center that is now getting up being stabilized on a much higher level than it had before. It was opened up just after COVID. And now it's really is the time where we have really stabilized the center, and we have a super good project for the market.

Galeria Mlociny, you see the same trend. This is a much bigger center, where you see this is 86,000 square meter versus Libero, that is 47,000 so it's twice the size. Here, we are seeing the same trend. We are continue working with the same things. This is a slightly bigger center that will take us another year or two to stabilize. And then after that, we will look at different options what to do with this as well. But really, the takeaway I want to say here that we see retail coming back.

We are much more positive about the centers. We are driving NOI dramatically, and we see tenants and we see footfall increasing in both of them up to good levels. ESG has always been high on the agenda for Echo and is still. We are continue focusing on really making sure that we are being the most sustainable company it can be. Towarowa, where we're going to do a hect -- a part of up to 1 to 2 hectares, we are really focusing how can we make sure that we do this as environmental friendly as we can. And we have also announced here in joint ESG strategy between Echo and Archicom and is divided into 3 blocks: For the planet, For the people and For the stakeholders. And also, what you've seen going through the last acquisitions we've done, we have bought a lot of buildings that were standing today, but we're demolishing all these buildings, we are demolishing now. We are recycling all the material from the buildings to be able to make sure that -- we are making sure that we are really taking care of the planet.

On Galeria Libero now, we are looking to put solar panels over the whole parking to make sure that we can get green energy to the center and to be able to fulfill in line with our ESG strategy and then continue being the leader when it comes to green strategies.

[Maciej Drozd, executive]

So now let's look again on the financials this time in a little bit more detail. So as you remember, our numbers, our net profit was slightly higher than the consensus. The margin, already highlighted in Residential segment stays very strong, and I think it's very supportive for our results and we expect this to continue in the future. The evaluation of investment properties was in this quarter, not strong for 2 reasons. One of them was that -- what is strengthened a little bit. And in fact, it continues in Q2. And another reason is that, as Nicklas mentioned, the environment in terms of valuation is more demanding. It's -- the yields are going up. So long term, we expect this to be offset by higher rents, so to keep projects profitable, but short term, of course, the yields expansion is having negative effect on the valuations. So we did not benefit in Q1 from that. Our balance sheet remains very strong. As usual, we focus talking about assets on what is for sale and what will be converted into cash into liquid assets shortly. And as we mentioned, our 4 projects that we are working on to be sold still in this year, we hope, and -- that's something very, very important for us.

Also, we have -- we continue to have high cash figure, which is important for the growth. So we can both growth in residential segment in Resi4Rent and by also new commercial projects, new office projects. So this stays on a very good level. If you look at our liabilities, we keep to have low net debt ratio around 30%, which is within the range, which is low end of the range that we target and both our long and short-term debt decreased slightly in the quarter. which is consistent with our strategy.

In particular, if you look at the maturity of the bonds versus cash, we don't have a lot of bonds maturing this year on top of what was already paid. So we focus right now on 2024, 2025. As I mentioned before, we issued already this year, both in Archicom and in Echo very well received, well priced and in particular, in case of Echo, long-term bond of 5 years. So we see that the environment is supportive, and we do very, very well in terms of results. If you look at our bond issue, and we will apply this to bonds maturing in '24 and '25.

I already mentioned and I just like to make it clear that the dividend in respect of 2023, so payable in 20 -- in 2022. So payable in '23 was already paid by Echo in February. So now we should start thinking about the dividend in respect of 2023, but 2022 is, for us, closed in terms of dividend. And that's all, and I think we can...

[Weronika Ukleja-Salak, executive]

Kick off the -- yes, let's start the Q&A session. Thank you very much, gentlemen. And you will not be surprised with the question that I will start the Q&A session, meaning residential sales. And I think this might be a question for you Nicklas. Could you please elaborate on your outlook regarding residential prices and potential sales pickup in the second half of the year?

[Nicklas Lindberg, executive]

What I said before, we believe that we will continue being sales growth and set prices continue going up as there will be a lack of supply on the market. As I said earlier, a lot of our supply today, you see a very strong supply that we're having in Wroclaw. You will see that during the second half of this year, there come a strong supply in Warsaw. And this will be a strong supply in Warsaw in the best locations where we really make sure that we will get the right pricing. So you will see that both from Echo and from the Archicom Group. We will continue having a strong sales in H2, and you will see that we would sell a lot in the strong market of Wroclaw, Warsaw Kraków and also in Poznan, where we will continue starting up new projects where we have a very strong market share. And we have the best projects on this market that will continue driving our sales and also the profitability of the group. You will also see that we're looking into this year, even how we can continue increasing our land bank because as we're selling, we need to make sure that we constantly fill up our land bank to make sure that we can continue growing after the -- yes, we're having today. We have 12,000 in our land bank, and then we will continue building it up as we see attractive opportunities to buy more land.

[Weronika Ukleja-Salak, executive]

Okay. And still sticking to the residential subject, and you touched it actually. So can you elaborate -- do we consider any merger or acquisition to enter Tricity residential market?

[Nicklas Lindberg, executive]

We're looking both at growing organically. We're looking at acquisition. We look at all the different options to continue growing our residential presence, but you need to take it in perspective. It was 2 years since we acquired Archicom. We have now done the integration. Both businesses has been working very profitability. And we've seen the synergies with them. Now we're putting them together. So now it's a natural step for us to take the next step and to continue growing our business. But as I said before, we do this all in line with our profitable strategy, just to make sure that everything we're doing, we need to make sure that we continues keeping the margin having today or even continue increasing the margin as we see on the market, there will be fewer players starting new projects, and we believe prices will continue increasing. And also we will have very, very attractive new projects to be started up during the year.

[Weronika Ukleja-Salak, executive]

Okay. Thanks. And switching to the Resi4Rent, our viewers, they would like to know if given the attractive pipeline of the new projects in Resi4Rent sector. Could you please tell us when in our opinion, would be the best moment to sell shares in Resi4Rent?

[Nicklas Lindberg, executive]

Today, we are, as you all know, PIMCO has 70% of the business. We have 30% of the business. As you saw earlier, we have until today 3,200 apartments ongoing out of the 10,000 we have in the pipeline. We are now saying that in the end of '24, '25, we will be closer up to the 10,000. And I think for anybody who would like to enter this market, it's interesting when you get up to a scale, where you have a lot of apartments ongoing. So as we are today, we are continue focusing on growing the business. We are continue focusing on being able to start up the projects to deliver the 10,000. Saying all of that, as in all the rest of our businesses, if somebody comes and offer us a great price to acquire the business, we will always consider it, but that is nothing that is related only to resi front, that is how we're having it in all our businesses. And also what is interesting for us to look at this one, as we've been so successful in the resi front, maybe what we're looking as well, is there other ways that we can continue growing other businesses in the same way. because this 30-70 has worked really well for us, both in resi front. We have the same in Towarowa and other businesses, where we can then diversify our presence because now when we've done the stuff -- with our resi front -- Resi4Sale business, we would like to continue also growing our commercial business in looking into new ways of growing it.

[Weronika Ukleja-Salak, executive]

Yes sure. Okay. Now maybe a question for Maciej. Regarding the stock exchange, so we have a question, is the stock exchange price of PLN 4 satisfactory for us considering the company assets are now worth over nearly PLN 6 billion.

[Maciej Drozd, executive]

Right. Of course, PLN 4 is price per share and PLN 6 billion is total value of assets. So these are two different numbers. But strictly speaking, answering the question is that we don't believe that the price is right. And one of the things we are doing is actually how we see one of the reasons for merging operations in one company, residential operations in Archicom is to help the market understand a little bit better -- what we are doing. Echo, has of course, different segments. And from the valuation perspective, it's a little bit difficult to put the right value for analysts and for investors, it would be much easier if you look at just at residential business because we have a number of examples of other companies which are active in residential business in Poland. So we think that this should help a lot in terms of transparency and in terms of valuation and should indirectly help also market to appreciate what is the true value of Echo. Because if you look at residential business valued properly, value of our retail assets that we will sell value of our Resi4Rent stake, et cetera, et cetera. Of course, you see that combined value should be much higher than PLN 4 per share. And if you focus, in particular, on Towarowa, for example, right, and the profitability potential of that project. again, you see that it is in our share price, it's actually valued at cost, at book value because we are currently valued at more or less at book value, while, of course, the profit potential is many, many times higher. So I could talk about it a lot, but short answer is no. And we are doing things right now to address it. And I think an important step is really consolidation of residential activities in Archicom.

[Weronika Ukleja-Salak, executive]

Yes, sure. I get it. And we are circling back to residentials. So can we comment briefly, at least, about sales in April and May regarding what we did in Echo and Archicom. What -- did we notice any pickup?

[Nicklas Lindberg, executive]

We see strong sales in -- like the rest of the market is seeing. And here we see, of course, there is -- in Echo, it's not what we are now saying, like I said before, there's a limited supply from Echo, limited a part of -- of partners we can sell. And that we -- why you will see that not the same pickup in Echo, but saying that as soon as we start up our new project in Warsaw, other project we have now in the pipeline for is second half of the year, you will see a visible pickup in sales that we will have much more products in the market. On Archicom that is the market leader in the Wroclaw market, you see of -- a continuous growth in sales. And you see that it's continuing going through now as well, where we are focusing in both our businesses to be able to start up new projects quick enough to meet the demand in the market.

[Weronika Ukleja-Salak, executive]

And I think this would be it for today. We finish up with the question about resi -- we started with resi. We finished with resi, a good way to finish. And so thank you, gentlemen. Thank you, everyone, who joined us today. And of course, we try to answer every question, but if we skip something. And if you want to find out more, please contact [indiscernible] or me directly. And we'll see you soon in September in -- on midyear results. Thank you very much, and see you.