AF Gruppen (Sell, TP: NOK115.00) - No longer a challenger
AF Gruppen (AFG) reported adj. Q2 EBIT 18% below consensus and 11% below our forecast. While margins were better than those of most peers, profit margins continued to fall and missed expectations. The EBIT margin remained well above the industry average, but seems to have come down from historical highs. We expect AFG to become Norway’s largest construction company in 2021e, and see it moving from being a ‘challenger’ into a market giant. However, noting the consensus risk and high valuation, we reiterate our SELL and have cut our target price to NOK115 (121).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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