AF Gruppen (Sell, TP: NOK100.00) - Q1 weak – as warned
In line with last week’s profit warning, the Q1 results were weak, hit by project losses in Sweden. Still, the company proposed a higher semi-annual dividend than we forecast, and we continue to expect dividends to exceed EPS in 2023, despite it now having a net debt position. However, while we believe project losses as seen in Q1 and in Q2 last year are always a risk in construction, we do not find this well enough reflected in the valuation, with a too-high P/E premium to peers. We find a better risk/reward in peers, and reiterate our SELL and NOK100 target price.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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