Fabege (Hold, TP: SEK125.00) - Swap reshuffle drives Q3 beat
SEK111m swap losses and a repositioning of interest rate hedges saw Q3 profits from rental operations beat our estimate and consensus. However, we still see interest rate costs equating to more than 30% of EBITDA in 2021, and then above the interest rate cap under the new tax law. With lower yields (1bp) and higher market rents, EPRA NAV rose 3% QOQ despite Fabege unwinding the swaps. We have raised our target price to SEK125 (120); while we still have concerns about high asset valuations and rising interest rates, following the drop in the shares, we have upgraded to HOLD (SELL).
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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