Aros Bostad - Initiation of coverage - In the zone
We see long-term upside potential in Aros Bostad as its strategy to take on more on-balance sheet projects materialises, thanks to its: 1) attractive landbank; 2) solid track record with recent project margins of 30%+; and 3) existing platform ready to scale up. We expect this strategic shift to have a full, IFRS-based, P&L effect by 2025e (we forecast a 2021–2025e EPS CAGR of 45%). The strong residential market, near-term supply shortage, and long-term housing deficit are key tailwinds. We initiate coverage with a BUY and SEK62 target price, corresponding to a 2025e P/E of ~6x.
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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