AF Gruppen (Sell, TP: NOK104.00) - Valuation downside
We are in line with consensus ahead of the Q4 results due at 07:00 CET on 15 February. With a 45% premium to peers on P/E, we believe peers with less-aggressive dividend payout ratios offer better risk/reward. Moreover, with EBIT margins down 266bp in the past two years and no EPS growth, we find the valuation premium unwarranted. We reiterate our SELL recommendation, but have raised our target price to NOK104 (99) on our updated forecasts and peer valuation.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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