Balder (Sell, TP: SEK260.00) - Top-line beat, but higher costs lead to lower than expected FFO
In connection with its Q4 results, Balder announced a 40% long-term equity ratio target, but as it is also targeting growth in the UK, we believe it might have to raise new equity. Q4 rental income was better than we expected, but due to a higher than expected costs and payable tax ratio, FFO came in below our forecast. Despite improving LTV, we note that NIBD/EBIT was unchanged. We reiterate our SELL recommendation, but have raised our target price to SEK260 (255) on minor estimate changes.Fastighets AB Balder is a Sweden-based company engaged in the acquisition, development and management of residential and commercial real estate. The Company's real estate portfolio is comprised primarily of residential real estate and is located in such cities, as Stockholm, Gothenburg, Lund, Malmo, Norrkoping, as well as in regions outside metropolitan areas of Sweden and in the Copenhagen region in Denmark. The Company's subsidiaries include Balder Storstad AB, Balder Mellanstad AB, Din Bostad Sverige AB, Egby Vindkraftverk AB and Serena Properties AB.
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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