AF Gruppen (Sell, TP: NOK144.00) - Premium P/E versus EPS growth
AF Gruppen has outperformed peers on revenue and EBIT growth in recent years. However, a higher share count and increased minority share of profits mean growth in EPS has lagged behind that in the top line and EBIT since 2015. Despite peer multiples coming up, AF Gruppen’s P/E21-23e still looks too high to us, and we believe underestimates risks attached to a construction company. Q1 marks EBIT low season for AF Gruppen, although it announced order intake totalling cNOK2.2bn this quarter. We have raised our target price to NOK144 (135) based on peer multiples, but reiterate our SELL.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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