AF Gruppen (Sell, TP: NOK115.00) - Inflation hurts profits
Higher raw-material and energy prices, as well as delivery challenges, had a negative impact on the Q1 results, and EBIT was below expectations in Building and Betonmast also due to cost-inflation-project-write-downs. We have lowered our 2022–2024EPS by 5% following the Q1 miss and “recalibration of expected profits in the project portfolio”, as management put it. We continue to see downside risk in AF Gruppen, given the premium to peers and elevated consensus. Thus, we reiterate our SELL and have cut our target price to NOK115 (130) on a lower peer group valuation and forecasts.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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