Moody's Ratings affirms Fabege's Baa2 rating, outlook changed to stable

Moody's Ratings (Moody's) has today affirmed Fabege AB's (Fabege or the company) Baa2 long-term issuer rating. The outlook has been changed to stable from negative.                   RATINGS RATIONALE "The ratings affirmation and the change of outlook to stable reflects the continued good operat...

Weekly Real Estate Matrix

SEK10bn deal, residential prices and several deals by PPI

This week, we raised our 2025e FFOps for PPI by 16.5% on recent transactions, Skanska divested assets, K-Fastigheter and Brinova agreed a SEK10bn residential deal, and we published a residential prices update. The weighted-average implied EBITDA yields on the stocks we cover are 4.39% for 2024e and 4.94% for 2025e.

Hexagon (Buy, TP: SEK137.00) - Still at a ~30% SOTP discount

Hexagon’s stock has seen a long-awaited recovery with Björn Rosengren set to become vice chairman in 2025, which we believe acts as a quality stamp and should appeal to a broader international investor base. We see Q4e as a clearing event, as 1) an earnings momentum story is building from 5% organic sales growth YOY and 15% adj. EPS growth YOY in 2025e; 2) the planned spin-off of ‘NewCo’ (~20% of EBIT) should remove its conglomerate discount and crystallise values; and 3) the valuation remains undemanding in trough territory on an absolute and relative basis, at a ~30% discount to our SOTP and...

Pareto Bank (Buy, TP: NOK73.00) - Still-solid profitability

Seeing scope for still-solid NII and cost control, we expect a Q4 ROE of 12.9%, despite somewhat elevated loan losses. We forecast a 2024 DPS of NOK5.0, implying a ~59% payout ratio (versus its >50% policy) and a 7.6% dividend yield. Favouring the bank’s strong loan-loss absorption capacity and its business model based on in-depth sector knowledge and close customer relationships, we continue to find the valuation attractive at a dividend-adjusted 2025e P/E of ~7.1x. Thus, we reiterate our BUY and NOK73 target price.

Seadrill (Buy, TP: USD54.00) - Awards seen as ‘good enough’

Two new long-term Brazil jobs at cUSD450k are on a par with our forecast, helping cycle duration and building visibility for the earnings story. Although we see consensus dropping for 2026 (we are 26% below on EBITDA), these datapoints seem ‘good enough’, given the weak sentiment for the sector. We reiterate our BUY and USD54 target price.