I recently celebrated Tritax Big Box’s brilliant growth outlook, one that’s built on an exploding e-commerce sector. Even though online retail volumes have suffered of late due to Brexit uncertainty, the long-term picture for internet retailers remains pretty solid.
If you’re not convinced, though, why not take a look at Tritax Eurobox (LSE: EBOX) instead?
That aforementioned piece discussed a report co-authored by creative agency We Are Social and social media management platform Hootsuite. It shows that UK online sales continue to rise at a healthy rate despite massive political and economic uncertainty. And it’s a report that happily — at least for Tritax Eurobox and its investors — shows that internet sales keep ballooning on the other side of the Channel too.
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Continental colossus
In particular, the co-authored Global Digital Report 2019 shows that the e-commerce signals in one of Tritax Eurobox’s markets are especially strong: Germany.
The company has more big-box assets in the Central European nation than in any other country, boasting sites in Frankfurt, Bremen, Bochum, Wunstorf and Hanover. According to the report, the total e-commerce market there is now worth more than $70.4bn. It rose 9% year on year in 2019 and outpaced the growth we saw here in the UK.
Some 81% of internet users in Germany have bought something online in the past month, the report added. This was ahead of the global average of 75% and the joint-third highest entry on the list (along with the UK, incidentally). But Tritax Eurobox’s other major territory of Poland was also high on the list and beat the global average with 76%.
Get in Pole position
Indeed, the company’s strong presence within Polish borders makes it particularly exciting. Rocketing economic growth in and around Central and Eastern Europe, and consequently rising e-commerce levels, are among the reasons I bought shares in packaging giant DS Smith.
And latest data from the World Bank shows why this was a sound idea. The breakneck growth of recent years is expected to slow in the medium term, sure. But estimates still put Poland’s likely GDP growth for 2020 and 2021 at a chunky 3.6% and 3.3% respectively. Compare this to the rises of around 1.5% forecast for the eurozone and for the UK in the corresponding periods.
What’s more, Tritax Eurobox has made expansion in Poland one of its strategic priorities. Just last week it spend €51.8m to acquire two brand new logistics spaces and development land in Stryków. These add to the company’s existing cluster of assets in and around Łódź, a region that sits slap bang in the middle of the country.
Tritax Eurobox doesn’t come cheap. At current prices it trades on a forward P/E ratio of 27.1 times. But I consider this to be a fair reflection of the firm’s exceptional structural opportunities. Besides, a monster 4.6% corresponding dividend yield helps to take the edge off that high P/E number.
