Bonava (Buy, TP: SEK50.00) - Negative sentiment, but deep value
We have reduced our 2022–2024e unit sales and starts by -27–37%given deteriorating residential markets, and in turn cut 2024e revenues by 14%. On our expectation of falling EBIT margins as a result of lower selling prices, we have also reduced our 2022e EPS by 3.4%, 2023e by 8.4% and 2024e by 34% (the company reports under completed contract accounting). Our focus in the Q3 results (due at c0730 CET on 27 October) will be on units sold and related market comments. We have cut our target price to SEK50 (75) after factoring in lower KPIs and peer multiples. However, at a 2022e P/B of 0.35x, we believe too many negatives are being priced in and reiterate our BUY.Bonava AB (publ). Bonava publ AB is a Sweden-based company, which is primarily involved in real estate development industry. The Company operates as a developer of housing units to consumers and investors in Sweden, Germany, Finland, Denmark, Norway, the Russian Federation, Estonia and Latvia. In Germany, the Company's offering is targeted at consumers and investors through both single-family houses and multi-family houses. The Company operates on the basis of an own-produced construction system in Germany, which is used in all new construction, thus enabling an efficient construction process. In Estonia and Latvia, the Company's offering is primarily targeted at consumers, based on multi-family houses. In Russia, it operates solely in Saint Petersburg region with offering comprises of multi-family houses.
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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