AF Gruppen (Sell, TP: NOK110.00) - Weak Q3; dividends exceed EPS
AFG reported Q3 EBIT adj. 17% below both our and consensus forecasts, while EPS was 26% lower as margins fell shy. The semi-annual dividend was raised to NOK3.5/share, leading to DPS again exceeding EPS. Management stated that the annual equity issue to employees makes this a sustainable dividend policy. We continue to regard the valuation as too high relative to peers and see consensus EPS risk based on EBIT margins down from peak levels in 2014–2016. We maintain our SELL recommendation and target price of NOK110.Kilen Brygge ASSandakerveien 99B KSAF Gruppen ASA is a contracting and industrial company. Through its subsidiaries, Co. is engaged in property, building, civil engineering, environment, and energy businesses in Norway, Sweden, Poland, and the United Kingdom. Co. has divided the business into five operating segments: Civil Engineering, Building, Property, Environment and Energy.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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